The pound dropped close to its lowest levels since the Brexit vote as markets braced themselves for hard evidence this week that the UK economy has been knocked off course by the decision to leave the European Union.

Sterling dropped half a per cent to $1.2874 against the dollar, dipping to its July 11 low and close to the $1.2798 it reached on July 6, which was the lowest since 1985.

The pound was also down by half a per cent against the euro at 87p for the first time in three years as currency speculators turned the most negative on sterling since records began.

Bearish sentiment intensified as markets prepared for a blizzard of official UK economic news on inflation, employment, retail sales and