Pound drops to lowest level against the yen since 2013, slides against dollar and euro amid EU referendum fears

Market uncertainty over the EU referendum has seen sterling slide (Getty)

The pound slid against foreign currencies on Monday morning as traders continued to move their money out of sterling ahead of the EU referendum.

Sterling fell to its lowest level against the Japanese yen since 2013.

It also hit a two-month low against the dollar, following a slide on Friday that wiped two cents off the value of the pound.

Against the euro, sterling hit a six-week low at 1.2592 per pound. The pound fell to as low as 151.50 yen, its lowest level since August 2013, while the euro fell to 119.87 yen, a level last seen in April 2013.

By the end of Monday trading, Sterling had recovered all of its losses.

Analysts said that that investors were high-tailing it out of sterling as anxiety about a possible vote to leave the EU sky-rocketed, but could not give a clear reason for the recovery at the end of Monday trading.

The pound swung as traders awaited the release of a Brexit poll conducted by ICM, which showed that support for Brexit had grown to 53 per cent and that the proportion backing remain had shrunk to 47 per cent.

"Ahead of the referendum, many look for sterling to underperform and the yen and Swiss franc to outperform," said Marc Chandler, global head of currency strategy at Brown Brothers Harriman.

Many investors are looking not only at Brexit but at a cocktail of other global economic events, including central bank updates and news of possible interest rate rises from the US Federal Reserve on Wednesday and the Japanese and English banks on Thursday.

The pound fell to its lowest level against the yen since 2013 and was also down against the dollar and euro (Pound falls)

David Buik, a market commentator at Panmure Gordon, said that the pound has fallen 9 per cent since November on the threat of higher interest rates in the US.

"It should not be forgotten that the UK’s economy has been coming off the boil for some months with growth falling from 2.4 per cent in 2016 to 2 per cent and may even drop to 1.8 per cent by the end of the year. So the contribution so far from the threat of Brexit I would venture to suggest is modest," he said.

The threat of Brexit has sent derivatives traders into overdrive, pushing sterling volatility, or the amount the currency is expected to move in the coming month, to over 28 per cent.

The record high was north of 30 per cent at the height of the financial crisis in October 2008.

Meanwhile the FTSE 100 index of the 100 biggest UK companies fell up to 0.7 per cent on opening to trade, down more than 40 points.

It closed down 1.16 per cent at 6044.97, its lowest level since March 10.

The EU referendum debate has so far been characterised by bias, distortion and exaggeration. So until 23 June we we’re running a series of question and answer features that explain the most important issues in a detailed, dispassionate way to help inform your decision.

What is Brexit and why are we having an EU referendum?

Will we gain or lose rights by leaving the European Union?

What will happen to immigration if there's Brexit?

Will Brexit make the UK more or less safe?

Will the UK benefit from being released from EU laws?

Will leaving the EU save taxpayers money and mean more money for the NHS?

What will Brexit do to UK trade?

How Brexit will affect British tourism

What will Brexit mean for British tourists booking holidays in the EU?

Will Brexit help or damage the environment?

Will Brexit mean that Europeans have to leave the UK?

What will Brexit mean for British expats?