The euro has shot up in late afternoon trading on rumours the European Central Bank is considering proposals for how to taper its quantitative easing programme.
The euro jumped from £0.8730 against the pound, which was already suffering amid Brexit speculation, to £0.8787 in a 0.5 per cent pounce.
Against the dollar, the single currency recovered virtually all of the day's losses on the news, rising from $1.1140 to $1.1192.
The ECB is currently buying €80bn a month of government and corporate bonds in a bid to stoke growth and inflation. The programme is currently scheduled to draw to a close in March 2017, although analysts had been expecting the ECB to announce an extension before the end of the year.
"Tapering" is the process by which the central bank reins in its bond purchases and is a form of monetary tightening, hence the euro's sudden strength at the prospect of less accommodative monetary policy.