Sterling has tumbled towards €1.10 as growing concerns about the chances of a disorderly Brexit spurred investors to hedge or slash their exposure to British assets.

The pound, its fortunes tied to the years-long process of negotiating Britain's exit from the European Union, is suffering from signals of panic among investors that the UK is headed for a no-deal Brexit under new Prime Minister Boris Johnson.

The pound crashed through trading barriers, falling to an intraday low of $1.2120 in shallower overnight Asian trade, the lowest since March 2017. The pound has lost 3.6 cents since Mr Johnson was named Britain's new prime minister a week ago.

"The prime minister made clear that the UK will be leaving the EU on October 31, no matter what," Mr Johnson's Downing Street office said in a statement about a phone call with Taoiseach Leo Varadkar.

Mr Johnson demanded again that the backstop would have to be struck out if there was to be a deal.

"The prime minister made clear that the government will approach any negotiations which take place with determination and energy and in a spirit of friendship, and that his clear preference is to leave the EU with a deal, but it must be one that abolishes the backstop," Downing Street said.

"The Taoiseach explained that the EU was united in its view that the Withdrawal Agreement could not be reopened," the Irish government said following the phone call.

"Alternative arrangements could replace the backstop in the future... but thus far satisfactory options have yet to be identified and demonstrated," the Irish government said.

Ever since the 2016 EU referendum, the pound has gyrated to the rhetoric of the Brexit divorce: after the result was announced, it had the biggest one-day fall since the era of free-floating exchange rates was introduced in the early 1970s.

Since the 2016 vote, sterling has now lost 28 cents. It was trading at $1.2177 at 1.30pm. It also fell sharply against the euro and the Japanese yen.

"We see little chance of Brexit fears calming in the near-term, and if anything will likely escalate further as we head closer to the October 31st deadline," said Mohammed Kazmi, a portfolio manager at UBP which has $136 billion of assets under management.

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Sterling briefly shot as low as $1.1450 on 7 October, 2016 during a so-called 'flash crash' in Asian trading that lasted only for a few minutes.

However the fall under Mr Johnson has brought it close to the 32-year lows struck in late 2016 and early 2017.

On entering Downing Street on Wednesday, Mr Johnson set up a showdown with the EU by vowing to negotiate a new deal and threatening that, if the bloc refused, he would take Britain out on 31 October without a deal to limit economic dislocation.

Government bond yield spreads over Germany have hit their widest levels in over a month, as worries grow over the potential impact of a no-deal Brexit on Ireland.

Many investors say a no-deal Brexit would send shock waves through the world economy, tip Britain's economy into a recession, roil financial markets and weaken London's position as the pre-eminent international financial centre.

Supporters of Brexit say that while there would be some short-term difficulties, the disruption of a no-deal Brexit has been overplayed and that in the long-term, the United Kingdom would thrive if it left the European Union.