STERLING has recorded its biggest monthly decline against the dollar since the wake of the Brexit referendum in 2016.
This comes against a wake of growing economic and political uncertainty.
The pound fell to 4.5% in August to $1.16, which marks the largest monthly drop since October 2016.
Sterling also declined by almost 3% against the euro.
The currency’s decline is reflective of the worsening outlook for Britain’s economy as the energy crisis takes its toll on millions across the United Kingdom.
The new prime minister, set to be announced on Monday, could add to the uncertainty as they set new fiscal priorities.
Analysts at JPMorgan said earlier this month: “Cyclical crosswinds are likely to intensify for the pound into the autumn as the UK economy navigates new fiscal initiatives against still-rising energy costs and consumer price index.”
Frontrunner in the Tory leadership race Liz Truss has promised to bring in £30 billion in tax cuts to try buttress the UK economy against the cost of living crisis.
The SNP's Shadow Chancellor Alison Thewliss MP said: "The UK Tory Government are presiding over economic chaos as inflation is spiraling.
"This, along with their sustained austerity agenda and devastating Brexit, has led to the political and economic uncertainty reflected in these figures."
Thewliss said the figures were "reflective of the grim outlook" for both businesses and concumers "as the energy crisis deepens".
She added: "There is a vacuum of leadership at the helm of the UK Government, with further uncertainty expected as a new Prime Minister sets out their fiscal stall next week, and energy prices continue to rise in the Autumn.
"Once again we've seen internal struggles within the Conservative Party spill out into the wider economy.
"Scotland was told in 2014 that we needed the strong shoulders of the UK to survive.
"Every day more people are realising that Scotland's future would be more secure away from the chaos of Westminster and in the hands of the Scottish people."
Economists believe loosening fiscal policy could alleviate the recession which has been forecast by the Bank of England (BoE) and many City economists.
However, some think a stimulus of this nature could make it even more difficult for the BoE to fight back against the worst bout of inflation in more than 40 years.
Chief economist at Investec in London Philip Shaw said sterling’s rapid fall was “very worrying” as it reflected concerns that, if Truss is named prime minister, her government’s policies would diverge from the BoE.
Global head of FX research at Deutsche Bank George Saravelos said: “Pricing pressures are becoming persistent and broader. But what kind of signal is the UK Government sending about inflation?”
He added that the BoE had not been aggressive or effective in its communications about the risks of inflation as either the US Federal Reserve or the European Central Bank.
Saravelos said currency markets’ reaction to aggressive fiscal promises that were unfunded or a broad-based VAT tax cut were likely to be less favourable than help on energy bills targeted at the relevant income groups.
Scottish Green MSP Maggie Chapman said: "This is yet another failing from an incompetent UK government that is missing in action.
"It comes on top of failure upon failure. Whether it is a disastrous Brexit, runaway inflation, skyrocketing prices, it's clear that the Tories can't be trusted with the economy.
"Millions of people are suffering and Downing Street simply doesn't care.
"There's no reason to believe that Rishi Sunak or Liz Truss will be any better. They backed every single one of Johnson's cuts and failures.
"They were stood right alongside him as he allowed the energy companies to rake in record profits while he decimated the welfare state.
"What they are offering is even more of the same."
The pound has also been pulled down lower by a broad rise in the US dollar this month.
However, sterling’s fall in August has been more severe than any of the G10 currencies besides Sweden’s krona.
