Bank of America has advised clients to prepare for a major rebound in sterling as markets become inured to each breathless twist in the Brexit saga, and focus instead on the underlying resilience of the UK economy.

The bank’s currency team said there may be one last leg down for the pound after Article 50 is triggered in March, probably hitting a three-decade low of $1.15 against the dollar before charging back up in V-shaped recovery later this year.

“The pound looks cheap. We think the start of the countdown to Brexit may prove to be the low and the opportunity to enter sterling longs (positions),” said strategists Athanasios Vamvakidis and Kamal Sharma.

“We have no doubt that many political hurdles lay ahead for the pound in the years ahead, but we doubt that the markets will be in a perpetual state of panic over every Brexit-related headline,” they said.

Sterling is likely to climb back up towards its post-Brexit ‘equilibrium level’ of $1.35 to the dollar, and could possibly $1.40, provided common sense prevails and Britain secures a transition deal with the EU to avert a cliff-edge shock for bilateral trade.

Bank of America said the markets have essentially priced in a ‘hard Brexit’ already. The pound would normally be “much stronger” based on the differences in interest rates and two-year bond yields that tend to drive currency markets.

The real effective exchange rate (REER) is almost 20pc below its long-run average and now matches the historic lows seen at the depth of the global financial crisis.