Overnight sterling fell through the €1.20 mark to open at €1.1958 this morning. It then fell marginally once again.

It is the first time the pound has fallen through the €1.20 mark in this latest round of sharp currency moves.

Currency traders said concerns over the UK’s AAA credit rating and relationships with the European Union are undermining sterling’s strength.

Since the start of the year, sterling has given up around 3% of its value versus the euro, having opened 2013 at €1.23.

Fears have already been growing over the likely path of sterling this year, with investors warning low growth and further QE could spark a sell-off.

Elsewhere in currency markets, the Swiss franc fell to its weakest level in 20 months as traders took advantage of the improved sentiment in Europe to dump the popular safe haven currency.