John Bromhead, currency strategist at Australia & New Zealand Banking Group warned Bank of England could be “forced to act”. Sterling tumbled against the dollar as low as $1.0327, the lowest level since decimalisation in 1971.

Mr Bromhead said: “The scale of the move today means the BoE will be forced into action, at the very least to try and jawbone some stability. An inter-meeting hike is incoming.”

Chancellor Kwasi Kwarteng has hinted at further tax cuts “across the board” saying his measures “favour overwhelmingly people at the very top”.

Shadow Chancellor Rachel Reeves said she is “incredibly worried” about the sell-off in the pound, blaming Mr Kwarteng.

She added: “There’s a selling-off of the pound and that was on the basis of the Chancellor’s so-called mini-budget on Friday.”

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