Around 1000 GMT, the pound was down 1.25 percent at $1.3165, compared with late on Monday in New York. The euro surged almost 1.3 percent to 84.65 pence. The British currency had surged late last week after Johnson's governing right-wing Conservative Party clinched a landslide general election victory. Johnson won a big majority Thursday on a promise to take Britain out of the European Union by the end of January, followed by a transition period when London and Brussels negotiate a trade agreement. European leaders have said that the December 2020 deadline would be too tight to complete a comprehensive deal. Johnson plans to pass a law guaranteeing Britain's Brexit transition period cannot run beyond the end of 2020, a source in his office said on Tuesday. "Sterling was slammed into reverse... after Boris Johnson announced the transition period will not be extended beyond 2020," said Andy Scott, analyst at financial services group JCRA. "By outlawing an extension, it leaves very little time in which to agree a comprehensive free trade agreement with the EU and means the clock is now ticking down to a firm cliff-edge (no-deal Brexit) next December." Scott said sterling's "impressive gains" since the election result had been completely wiped out.