The pound fell to a 27-month low of $1.2408 Tuesday after Boris Johnson and Jeremy Hunt appeared to make it more likely that the U.K. will leave the EU without an agreement on the terms to smooth the way.
Britain's Parliament has repeatedly rejected May's deal with the bloc, in large part because of a measure designed to keep goods and people flowing freely across the border between the U.K.'s Northern Ireland and EU member Ireland.
Brexit supporters think the so-called backstop keeps Britain too closely bound to EU trade rules. Some have argued for an exit clause or time limit to ensure that Britain isn't trapped in the backstop indefinitely.
But during a leadership debate Monday, front-runner Boris Johnson rejected "time limits or unilateral escape hatches or all these elaborate devices" and said "the problem is very fundamental."
His rival, Jeremy Hunt, agreed that "the backstop, as it is, is dead."
An invisible border is crucial to the regional economy, and also underpins the peace process that ended decades of violence in Northern Ireland.
Conservative legislator Simon Hoare, who heads Parliament's Northern Ireland Committee, said "this is a very, very dangerous step that both men seem to have taken yesterday."
He told Sky News that the consequences of a hard border were "beyond contemplation."
Most economists say that leaving the EU without an agreement would disrupt trade and plunge Britain into recession. Polls suggest a majority of Britons oppose a no-deal Brexit. But the 160,000 members of the Conservative Party who are choosing Britain's next leader are strongly in favor of a hard Brexit.
Pro-EU Conservative lawmaker Dominic Grieve, a key player in ongoing efforts by Parliament to rule out a no-deal exit from the EU, accused the two leadership candidates of giving in to "growing extremism" about Brexit.
"The consequence of that is to make the choices starker and starker," he said.
Follow AP's full coverage of Brexit and the Conservative Party leadership race at: https://www.apnews.com/Brexit