Sterling slumped to fresh lows on Wednesday with traders citing increased concerns that the U.K. might leave the EU without a formal trade agreement.
The U.K.'s currency fell to $1.286 during lunchtime trade in Europe, a level not seen since August of last year. Against the euro, sterling fell below 90 pence for the first time since November 15, 2017.
The currency has been particularly volatile on the back of the decision to leave the European Union. It is down about 13 percent since the referendum day on June 23, 2016. This volatility is unlikely to change in the near future. One strategist told CNBC Tuesday that sterling could sink or soar by as much as 10 percent at the start of next year depending on whether or not the U.K. reaches an agreement with the EU.
The U.K. is due to leave the EU on March 29, 2019; but negotiating teams are still hashing out the details of an accord that will allow them to keep frictionless trade. Doing so seems to be getting more technically and politically difficult by the day, with central bankers, politicians, and businesses claiming there is a growing chance a deal won't be found in time for the deadline.
"Sterling is selling off on the back of the impasse in on-going Brexit negotiations related the terms of future U.K.-EU trade in goods. Recent comments by U.K. Trade Minister Liam Fox that the risk of a hard Brexit is 60 percent seems to be the catalyst for the move," Kallum Pickering, U.K. economist at Berenberg told CNBC via email.
Prime Minister Theresa May was told Wednesday to come up with a "plan B" for Brexit during a meeting with the Scottish First Minister Nicola Sturgeon. The latter said that May's current plan "seems to be dead."
Bank of England Governor Mark Carney told the BBC last week that the there is an "uncomfortably high" chance that the U.K. and the EU will not reach an agreement.
Japanese bank Nomura announced Wednesday that it has begun telling clients that it will move some business from London to Germany to avoid any disruptions in the case of a no-deal.