The PM this afternoon called off Tuesday's vote, prompting a decline in the value of the pound to a low of $1.2515 - down a sharp 1.7 per cent on the day.
The initial decline followed a morning of contradictory signals from the Government over the crunch Commons vote on Mrs May's plan to leave the European Union.
At 4pm, the pound was 0.9073 pence against the euro. It had earlier slipped nearly one per cent against the euro to 90.47 pence, its lowest since September 5.
The FTSE 100 was also down, by 0.5 per cent on the day, highlighting the depth of investors' concern.
Investors are worried that the political gridlock in Britain over how to leave the EU is increasing the likelihood of the country exiting the bloc without a deal on future relations.
That is a worst-case scenario, the Bank of England says, that could lead to the deepest recession in about a century and a further plunge in the pound.
The PM will travel to Europe to seek concessions on her Brexit deal, after calling off a crunch House of Commons vote in which she was expected to go down to a heavy defeat.
Mrs May's statement came amid dramatic scenes at Westminster, as news of her plan to postpone Tuesday's "meaningful vote" broke just minutes after Downing Street had insisted it was going ahead.
It is understood that the PM had been warned that she faced a large-scale defeat when MPs voted at the end of five days of debate in the Commons on her plans.
She spoke with her Cabinet colleagues by a telephone conference call before addressing the Commons.