Pressure is being put on the pound due to policy actions from the Bank of England.
The Bank of England's announcement that it will be expanding its quantitative easing programme has led to big moves on the markets.
Sterling fell sharply after the institution's Monetary Policy Committee (MPC) said that the scheme would buy £125 billion of assets, rather than £75 billion. The pound dropped to just over $1.50 against the dollar immediately following the midday announcement, after trading as high as $1.52 earlier in the day.
On the equities markets, the FTSE 100 traded relatively flat following the announcement. The index ended the day 2.19 points up at 4398.68.
Quantitative easing - known as the modern-day equivalent of printing money - was introduced in March. It sees the Bank buy up corporate and government bonds, a process which expands the amount of capital flowing through the economy.
This in turn has the effect of increasing the supply of money to commercial banks, encouraging them to loan more to their customers. Tightened credit flows have been a major cause of Britain's current economic downturn.
Movements on currency markets are indicative of investor confidence in the economy as a whole. The pound has dropped sharply over recent months over concerns that the UK faces a more damaging economic downturn than other nations - with the currency recently plumbing an all-time low against the euro last December and a 24-year low against the dollar of just $1.35 in January.
In this way, the latest fall in the value of the pound indicates that many investors are becoming more wary about putting their money into Britain due to the radical Bank moves.
Commenting, Joshua Raymond, market strategist at City Index, said: "The pound fell heavily immediately after the Bank of England announced plans to increase asset purchases by £50 billion … The increase in money supply may [put] short-term pressure on the sterling."
He added: "The Bank is trying to be aggressive in their attempt to turn around the economy and today's decision to increase money supply and asset purchases continues along the same line."
