Is it safe to catch falling knives and might it hurt?

How far could sterling fall and is this a repeat of the financial crisis?

"A British exit from the European Union would be so devastating for the pound that 29 out of 34 economists in a Bloomberg survey see it sinking to $1.35 or below within a week of a vote to leave - levels last seen in 1985." Wow!

Now read that again after checking the current rate for Cable. At the time of writing it is $1.3990. Bloomberg's supposedly "devastating" sell-off represents a further loss of just five cents. The pound has dropped that much in just the last fortnight on the mere threat of Brexit. 

In 2008-09 during the financial crisis the pound fell from $1.99 to $1.40. In Autumn 1992, when Britain left the Exchange Rate Mechanism it fell from $1.99 to $1.40. And now here we are again at, er, $1.40. There are two possibilities: Sterling is doomed, heading for abyssal lows against the dollar, or it will rebound from the levels that have supported it five times in the last 25 years.

Did Mark Carney talk sterling down and could rates go negative?

The Bank of England governor told parliament's Treasury Committee yesterday that "if we were in a position where the economy needed additional stimulus… we could cut interest rates towards zero". He did, however, say he had "no intention and no interest" in setting a negative Bank Rate.

Even without the chance of negative rates the possibility of further rate cuts and asset purchases was not exactly positive for the pound, as evidenced by its third day in possession of the wooden spoon. Sterling lost one euro cent, one and a half US cents and two and a half Japanese yen. It was down by an average of 0.9% against the other dozen most actively-traded currencies and its only pathetically meagre achievement was to hold steady against the NZ dollar. 

The Canadian and Australian dollars fared better than the Kiwi but not by much: both picked up three quarters of a cent, equivalent to 0.4%. Their underperformance was in line with a broadly risk-off mood among investors which took oil and equity prices lower.

How will sterling react to today's UK ecostats and might there be a rebound?

BBA mortgage approvals and the CBI's Distributive Trades survey are not normally of much importance to the pound. However, after three days of aggressive selling investors might be inclined to take some profits on their short positions if the numbers are strong.

Since the beginning of the year sterling has fallen by -6.3%. Almost half of that move took place in the last seven days. The bookies are all quoting odds-on prices for Britain to stay in the EU and the latest opinion poll also points to a vote to stay. It is very tempting to look for a sterling rebound.

But catching falling knives is a notoriously hazardous pastime.