Sterling slid as much as 4.7 per cent against the dollar to $1.035, hitting a record low in Asian trading on Monday after UK chancellor Kwasi Kwarteng vowed to pursue more tax cuts.
In midday Asian trade, the pound was at $1.056 against the dollar.
Sterling also fell as much as 3.7 per cent against the euro to €1.0787, reaching the lowest level since September 2020.
Kwarteng on Friday unveiled a £45bn debt-financed package containing the biggest set of tax cuts in half a century.
A large portion of this borrowing is to be financed by gilts.
“We had argued that the path forward for sterling would depend heavily on the monetary response to inflation over the near term and well-targeted fiscal measures, but so far the delivery has been less than encouraging on both fronts,” said foreign exchange analysts at Wall Street bank Goldman Sachs.