FX round-up: Cable stages largest two-day fall since 1971

Sterling plumbed its lowest level since 1985 on Monday – hitting an intra-day-low of 1.3118.

Its approximately 14% drop since the polls closed constituted its largest two-day retreat since the end of the Bretton Woods-era in 1971.

Nevertheless, and as Jim Reid at Deutsche Bank pointed out in a research note sent to clients, "there have been 8 bigger daily down in the pound moves since 1862".

"The bigger moves (with brief reasons for those within the last century) are 1) 19 Sep 1949: (-30.41%) Pound devalued under Bretton Woods due to economic concerns; 2) 21 Sep 1931: (-23.57%) Gold Standard abandoned in the Depression; 3) 30 Sep 1869: (-18.75%); 4) 20 Nov 1967: (-13.02%) Harold Wilson's famous 'pound in your pocket' devaluation to battle the UK's economic problems; 5) 25 Mar 1863: (-10.90%); 6) 10 May 1940: (-9.79%) War related deviation from the dollar peg; 7) 25 Sep 1931: (-7.89%) A few days after the Gold Standard was abandoned, the pound continued to depreciate although it did jump by 7.14% next day. 8) 19 June 1866: (-7.76%)," Reid explained.

Weakness in sterling came amid market-chatter that hedge funds were beginning to pile-up bets against sterling and a day before the Prime Minister travelled to Brussels.

Acting as a backdrop, speaking from the European capital US Secretary of State John Kerry called on the European Union not to in any manner ‘punish’ the UK for its decision.

“It is absolutely essential that we stay focused on how, in this transitional period, nobody loses their head, nobody goes half-cocked, people don’t start ginning up scatter-brained or revengeful premises.”

US Treasury Secretary Jack Lew on the other hand reassured investors that the challenges created by Brexit could be overcome.

“There’s no sense of a financial crisis developing,” Lew said in remarks to broadcaster CNBC.

“There’s no question this is an additional headwind but I think it is something we can manage through and Europe and the UK can manage through.”

Over on the other side of the globe, analysts were musing on the additional pressure that Beijing would now come under to depreciate its own currency, the yuan, given recent weakness in the likes of the pound and the euro.

Indeed, in response to the recent gyrations in the market the People’s Bank of China lowered its reference rate for the yuan by 0.9% to 6.6375 against the US dollar - the most since August 2014.

In parallel, the US dollar index accumulated a 2.4% rise over the course of the past two sessions.