Sterling fell more than one percent against the yen and hit a 7-month trough versus the euro on Monday as investors rushed to exit risky carry trades.
Sterling's losses were most pronounced against the yen as shorting the Japanese currency and buying the pound had been one of the market's favourite carry trades with Japan's interest rates at just 0.5 percent compared to Britain's 5.25 percent.
But a recent sharp sell-off in stocks and rise in market volatility has made investors more risk averse and less willing to hold such positions. Last week sterling shed 4.5 percent versus the yen, its biggest weekly fall since November 1999. That tumble also dragged the pound down versus the euro and the dollar.
By 1522 GMT, sterling was down 1.5 percent at 223.42 yen, off an earlier 4-1/2 month low of 221.32. It hit its weakest level in nearly six months against the Swiss franc, another low yielder often used in carry trades.
The pound fell one percent to a 3-month low of $1.9185, trading more than 7 cents below January's 14-year high. The euro hit a 7-month high of 68.42 pence.