Sterling fell sharply against both the euro and the dollar over the heightened scare that Britain will crash out of the EU at Halloween.
The renewed jitters for the UK currency came as Jeremy Hunt and Boris Johnson prepared to push their case in a television debate to become the next British leader.
“For traders, we are seeing a double whammy of no-deal Brexit fears, coupled with a Bank of England which suddenly sounds open to further easing in the event of a disorderly Brexit,” said Joshua Mahony at online broker IG.
Against the euro, it tumbled to trade close to 90 pence, down by a significant 0.4% in the session, and at $1.244, its lowest since April 2017.
“A general pound malaise has taken us through the lows from Friday,” said Jeremy Stretch, head of G-10 currency strategy at Canadian Imperial Bank of Commerce.
“It looks increasingly probable that [UK] second-quarter GDP is likely to be negative for the first time since the end of 2012. With the third-quarter outlook also poor, this will add to debate about the Bank of England joining the global easing trend,” he said.
The Government believes that the threat of Britain crashing out at the end of October has risen substantially, as the two contenders in the Tory Party to succeed Theresa May as prime minister dial up their rhetoric.
And the Irish Exporters Association called on business to do they can to prepare for the worst possible outcome.
“We are deeply concerned by the recent hardening of the political rhetoric in the UK leadership race on the possibility of a no-deal Brexit on October 31 2019,” said chief executive Simon McKeever at the business group.
“We are concerned that, three months after the original Brexit deadline, only very few companies in the Irish trading community are fully prepared for all outcomes,” he said.
Irish shares were mixed.
The two major bank shares, AIB and Bank of Ireland, which tend to fall during heightened fears over Brexit, rose by 1% and 1.7%.
And the Ftse-100 which has a large number of international firms, as well as the Ftse-250 which broadly reflects the UK economy, both fell.
Capital Economics said it expects the UK will increase spending in the event of a crash-out Brexit, citing “commitments” by both Tory contenders.
“But, with the economy near capacity, any fiscal stimulus is likely to boost inflation. As a result, in a deal or no deal, we think this would require higher interest rates than might be the case without this stimulus,” the consultancy said.