Sterling tumbled to a near-two year low versus the yen and slid against the dollar on Wednesday as increased risk aversion and a view that UK interest rates are set to fall led investors to sell the pound.
Concerns about the health of the global economy in the wake of a 75 basis point cut from the Federal Reserve has led investors to wind down carry trades where they borrow low yielding currencies like the yen to buy higher yielding assets. Comments from the Bank of England governor added to expectations that there will be a February rate cut, eroding the currency's yield appeal.
By 1454 GMT the pound had fallen as low as 204.69 yen, down nearly 2 percent and its lowest since April 2006, 15 percent lower than its 241 yen peak set in November. It was down 0.6 percent versus the dollar at $1.9490. The euro was up 0.15 percent at 74.72 pence.