Sterling sank 10 per cent in value to its weakest since before the 1985 Plaza Accord on Friday after Britain voted to leave the European Union, triggering a global rush of capital into the traditional security of the yen and the Swiss franc.
Alongside the biggest moves in the pound in living memory the euro, which is expected to struggle given worries about the impact of a “Brexit” on the euro zone economy, also dropped sharply against the dollar.
The franc surged to its strongest in almost a year against the euro and the yen to its highest in more than two years. The Swiss National Bank became the first major central bank to step in to drive down the value of the franc, while speculation that the Bank of Japan could also act limited the yen’s advance.
Japan said it would respond to “extremely nervous” exchange-rate moves, signalling a readiness to intervene.
The pound fell more than 10 per cent to $1.3228 (£0.95) GBP=D4, its lowest since before the world’s major economies signed a deal to weaken the dollar in September 1985.
By 0830 GMT, it had recovered from those lows to trade at $1.3770 (£0.99), with traders citing Bank of England chief Mark Carney’s comments that the central bank stood ready to provide extra support as a reason for the bounce.