The pound dropped to its lowest level in more than 30 years this morning as Britain backed a decision to leave the EU.
The Leave result saw the pound hit $1.3305, wiping about 10 per cent off the value of the currency and reaching a level not seen since 1985.
Shortly after polls closed at 10pm on Thursday, the pound had rocketed to $1.50, its highest performance of 2016.
However, sterling began to creep back up as the day progressed and was 7 per cent lower against the dollar at $1.392. The pound was down just under 5 per cent against the euro.
Chris Towner, chief economist at HiFX, said: “Sterling is starting to find its footing. However, it is still trading at significantly lower levels than yesterday.
“The risks are high and everything depends on what happens next. Sterling has seen its most volatile session in over 20 years with GBP/USD dropping from $1.50 to as low as $1.32 before regaining its footing. Because this also has a negative impact on the euro, the weakness in sterling against the euro has been less severe.”
Bill O’Neill, head of the UK investment office at UBS Wealth Management, said: “Westminster, Brussels, the Bank of England and the European Central Bank will be under immediate and immense pressure to calm the markets. But the markets will not wait – they are a discounting machine and they will overreact first, think later.”
“Over the next 12 months we expect sterling to fall toward $1.30 against the US dollar, gilt yields to fall back towards 1 per cent and the FTSE 100 to drop by 10 per cent from levels before the vote. The euro and European equities will also come under pressure with the whole European project now under something of a cloud.”