The pound showed little sign of a revival today after fears over political uncertainty hammered the currency yesterday.
Sterling remained below 1.50 against the dollar at 1.49 and flat at 1.10 euros as the threat of a hung Parliament and delays in tackling the UK’s debt mountain weighed.
CMC Markets currency analyst Michael Hewson said the selling pressure had intensified on sterling after it fell through the psychologically important 1.50 barrier.
“The pound now needs a recovery back above 1.5020 to try and stabilise in the first instance,” he warned.
Sterling hit its lowest point for 10 months - 1.478 - against the dollar yesterday, falling more than four cents amid lingering uncertainty and hitting holidaymakers in the pocket.
Experts have warned that the currency will remain under pressure until the general election.
Mr Hewson said markets would watch keenly where the pound finished against the dollar at the close of trading in New York this evening - as a finish below 1.485 dollars would mark another technical sell signal for currency traders.
A move below this level could see a fall back to the 1.35 lows of early last year, while “all bets are off” if a hung Parliament emerged - with the chance that sterling could slide all the way back to near parity with the dollar and the 1.03 all-time low seen in February 1985.
He added: “Until the political parties come out and say this is what we are going to do to try to get the deficit down, investors are going to be running scared.
“The UK is treading through bogland at the moment, nobody can take any steps whatsoever to assuage market fears.”
Overnight, the pound also fell to a 25-year low against the Australian dollar after the country’s central bank lifted interest rates to 4%.