The pound tumbled against both the dollar and the euro in morning trading as investors showed their nerves over political uncertainty in the UK.
Sterling was down 0.3 per cent against the dollar, at $1.3129, in late morning trading, and fell 0.4 per cent against the euro, to €1.1318.
The falls came amid political turmoil in the UK, as the Prime Minister grappled with accusations against various cabinet ministers, as well as hints Brexit negotiations are beginning to go awry.
Banks go rogue
Yesterday the Financial Times reported a group of "large financial institutions with big London operations" had met with US commerce secretary Wilbur Ross to vent their frustrations at the lack of progress in Brexit negotiations. Analysts suggested this may have pushed the pound lower.
"The fears over a potential Brexit no-deal are rising, as we move within 16 months of the UK’s exit from the EU," said Joshua Mahony, market analyst at IG.
"A meeting between the US secretary of commerce and a number of international banks with a large UK footprint has led to an insistence that jobs will move abroad en mass in the near future given the current pace of progress.
"With negotiations still faltering at the first hurdle, it is becoming increasingly likely that this government will lead us to a cliff edge, providing an increasingly bearish bias for the pound as we move forward in the absence of a breakthrough in negotiations."
Lack of clarity
Jordan Rochester, of Nomura, added: "It’s hard to trade in the short term based on the politics, given the various direction these scenarios can go.
"I can imagine the weakness we’ve seen this morning persists until we get some clarity. A lot will rest on any signs of progress on Friday in the Brexit talks and/or how the political scandal will go before a significant rally can get underway." Hold tight – it's going to be a long wait.