Sterling slid nearly 1%, retreating from its highest level since the Brexit vote, after Bank of England Governor Mark Carney said any coming interest rate rises would be limited and gradual.
Speaking at the International Monetary Fund in Washington, Carney reiterated the central bank's message last week that record low interest rates could rise in coming months, but added that "any prospective increases in Bank Rate would be expected to be at a gradual pace and to a limited extent".
His comments pulled the pound, already lower on the day,down 0.9% to the day's low of $1.3465 before it settled around $1.3480, 0.8% lower on the day.
Sterling also lost ground to the euro, last down over half a percent at 88.45 pence per euro.