The pound instantly sank 1.7 per cent to $1.2730 upon the publication of the official broadcasters' exit poll suggesting that the Conservatives had failed to achieve an overall majority in the General Election
The shock poll indicated that the Conservatives have fallen short of an overall majority, resulting in a prospective hung parliament.
If the poll is accurate, the Conservatives are set to be the largest party but 12 short of the 326 required for a parliamentary majority.
Against the euro, the pound dropped over 1 per cent to 1.13 euros.
At 23.25 the pound was back up slightly to $1.2822
Taking a pounding
Samuel Tombs, an economist at Pantheon, described the exit poll result as a "thunderbolt" for financial markets.
"Even if the Conservatives squeak home with a small majority, we see no reason why sterling should trade above its pre-election announcement level of $1.26."
"With Brexit negotiations expected to begin formally on 19 June, markets rightly will be worried that hardline eurospectics will retain leverage over the Prime Minister’s negotiating hand, increasing the risk of a very hard Brexit."
Sterling sank 10 per cent against the dollar in the immediate wake of last June's Brexit vote, taking the currency down to its weakest level in 31 years at $1.3218.
Sterling since the Brexit vote
By October it had fallen as low as $1.2117, although in May it was back above $1.3 as it looked as though Theresa May was heading for a landslide victory.
“The market will be praying that this exit poll has got it wrong. Currency volatility is the best proxy for market fears; if the Conservative ship is sinking then the market will be looking for a life boat,” said Lee Hardman, a currency analyst at MUFG.
“It means Jeremy Corbyn could well be Prime minister in days, creating massive uncertainty for markets and the outlook for brexit negotiations,” said James Knightley of ING.
Join our new commenting forum
Join thought-provoking conversations, follow other Independent readers and see their replies