Investors appear to view a no-deal Brexit as a growing possibility, especially after Britain's Trade Minister Liam Fox suggested over the weekend that the likelihood of a no-deal outcome is as high as 60 per cent.
There was no obvious trigger for Wednesday's big moves lower, but rather a building sense of investor anxiety as the clock ticks down towards a series of EU-Britain meetings starting in September with no agreement in sight.
In his accompanying note, Mr Patel explained that trading was light and in the last nine years, sterling has fallen more than 0.5% on seven occasions.
Markets will be watching the October Council of Ministers to determine whether to continue selling off the pound.
Nervousness over the UK's prospects of striking a deal with the European Union has sent sterling sliding in recent days, falling as low as $1.2842 today, the lowest point since August 2017.
Should the pound experience similar losses today, this could see the pound U.S. dollar exchange rate on track to touch a fresh one-year low by the end of the trading session.
"Some are thinking in the market that the Bank of England raised rates in order to give them ammunition to cut them in the face of a no-deal", said Neil Jones, a foreign exchange expert at Mizuho Bank.
Risk reversals - used commonly to hedge against expected currency moves - in sterling/dollar fell to their lowest since early March 2017.
The UK government has so far made little progress in agreeing on a post-Brexit trading deal with the EU.
"We remain bearish on the pound in the short term until the Brexit mess is out the way and look for the currency to enter a $1.27-1.28 range before the leaders' summit in September", said Nomura strategist Jordan Rochester. The pound has lost more than 10 per cent since April and is down nearly 15 per cent since the Brexit vote in June 2016.
Puts are an option to sell an asset and calls the right to buy an asset.
Traders are also preparing for Friday's reading of second-quarter British economic growth numbers, which might offer some relief.