The value of sterling has fallen by about a fifth since the beginning of the year and is now worth less than half what it was in December 2017.
The pound was worth around 60p when it peaked at $1.2820 on the UK’s FTSE 100 index in mid-October.
The drop has made the currency more expensive for businesses and consumers.
It has made it more expensive to buy foreign goods and services.
The Bank of England governor, Mark Carney, has warned that sterling could become a “hot commodity” in the coming weeks and months, and is likely to cut interest rates.
The fall in sterling has been driven by a weakening US dollar and weaker economic growth in the UK, but economists warn that the currency’s value could also rise if other countries devalue their currencies, or if the UK economy does not recover from the Brexit vote.
The US dollar is at its lowest level since early 2009 and the Bank of Canada is keeping interest rates at their current level of 0.25%.
The Bank has also announced that it is considering whether to increase its policy rate in September, which will be the first increase in its record low interest rate policy rate range in more than 20 years.
The rise in sterling will have a direct impact on the price of UK government bonds and on the value in some sectors of the economy, including housing and retail.
The dollar is down 2% against the euro since its all-time high on December 12.
The Treasury has cut its inflation forecast for next year to 1.5% from 2.2%.
But the UK has been hit by an increase in imports, particularly from China.
On Friday, the US central bank raised its inflation target for this year by two percentage points to 1% from 1% and said it was raising rates on other major commodities to try to boost the UK manufacturing sector.
“The UK has become a net exporter of manufactured goods and the export market is in disarray,” the US Federal Reserve said in a statement.
“If China’s economy continues to recover, it is likely that exports to the UK will grow even further.”
The pound has lost almost a fifth of its value since December 2017 and has lost about half its value in the past year.
It has been trading around 64p on the London Stock Exchange.
The UK’s official currency is the pound sterling, which has fallen to 60p after recovering from a peak of more than 80p in December.