In overnight trading, sterling plunged 4% to £0.90 against the euro in what financial traders are describing as a “flash crash”. After the initial crash, sterling is continuing to weaken and is heading closer to £0.91 against the euro in trading this morning.

Sterling crashed even harder against the US dollar with its value plummeting 6% to $1.18, its lowest level in decades.

A number of factors appear to have caused the slump in sterling’s value, including rogue computer trades and comments made by the French president Francois Hollande that the EU needs to be tough in the Brexit negotiations with the UK.

Sterling has been under intense pressure since the Brexit vote. While there was an initial plunge in the London stock exchange and other equity markets, the fallout from the Brexit vote has largely been played out in the currency markets.

Last month, US bank JP Morgan extended its forecast range for sterling/euro out to £0.91. The bank said it expected further pressure on sterling as it sees a number of downside risks to the currency.

“Our forecast envisages a period of chronic stress on sterling as the UK struggles to fund a record current account deficit with no growth and barely any yield,” the bank said.