Conservative Party leadership candidate Boris Johnson gestures as he talks during the launch of his campaign in London, June 12, 2019.

Political commentators have speculated that Johnson could ask his lawmakers to vote for a snap election if opposition MPs are successful in passing the legislation to block a no-deal Brexit.

Johnson is due to meet his cabinet for an emergency meeting later on Monday, with reports that he will also be speaking to members of the wider Conservative Party too. Opposition lawmakers are trying to pass legislation this week to stop a no-deal Brexit — something that has increased in probability in recent months as Johnson has pledged to leave the EU "come what may" on October 31.

The currency slipped 0.7% on the session to trade at $1.2074 by 1:30 p.m. London time, extending losses an hour later to hover near $1.2053.

Sterling fell against the dollar Monday following dismal manufacturing data and speculation that U.K. Prime Minister Boris Johnson could be planning a general election in the coming months.

"Cabinet is being called for this afternoon," BBC Political Editor Laura Kuenssberg said on Twitter. "Real possibility now Johnson might put a motion down to ask MPs to vote for an election this week."

Sky's political editor also said there were rumors that Downing Street was looking to force a vote on an early election. The Guardian newspaper's political correspondent said there were "very strong rumors" that a U.K election could be called this week and The Sun's political editor said that Johnson "is preparing to go to the country."

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Asked about an election, a spokesperson for Johnson told reporters Monday morning that the U.K. leader had already been very clear that he doesn't want one. Meanwhile, Jeremy Corbyn, the leader of the opposition Labour party, said that his lawmakers were willing to have a snap general election. This comes despite a warning from former leader Tony Blair that an election could be a trap from the ruling Conservative Party.

There has also been speculation over a possible date for an election, which is usually recommended by the prime minister and could be a very contentious issue. Opposition lawmakers would want the date before October 31 — presumably with some still wanting to overturn Brexit before the deadline — while there are reports that Johnson could instead opt to have the vote in early November thereby forcing through some sort of EU exit.

The British pound had already been falling on Monday morning after new data showed manufacturing contracted last month at the fastest rate in seven years. The IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index (PMI) fell to 47.4 from 48.0 in July, far below market expectations.

Jane Foley, head of FX strategy at Rabobank, noted that the pound had also been falling on news that Conservative MPs could be thrown out of the party if they voted against the government on the bill to prevent a no-deal Brexit.

"Growing rumors that a snap election could be called has added to the political uncertainty and the pressure on the pound," she told CNBC via email.

There is not another scheduled general election in the U.K. until 2022. Britain voted 52% to 48% to leave the EU in the June 2016 referendum.

—Reuters contributed to this report.