The pound had already shed more than 1 percent the previous day on the back of British Prime Minister Theresa May's announcement on Sunday that the formal process that will take Britain out of the European Union will start by the end of March.
Sterling meanwhile traded at 87.56 pence to the euro - its weakest level since 2013.
On Monday, the pound currency fell to a three-year low against the euro and a three-month low against the dollar. "People will be speculating - one day it's going very well, one day it's not going so well", Hammond said.
Announcing that the government will before the end of March 2017, trigger article 50, the process to end Britain's membership of the EU, May said members of parliament will not get a vote on that process.
May said the United Kingdom would become "a fully independent, sovereign country" with "the freedom to make our own decisions on a whole host of different matters, from how we label our food to the way in which we choose to control immigration".
That much-repeated phrase "Brexit means Brexit" sounded increasingly meaningless as the pressure mounted for her to say when, how and on what terms Britain would leave the EU.
Investors have begun outlining their concerns.
Why is the performance of the London market linked so closely to the value of the pound?
This will allow the government to seek to keep, amend or cancel any legislation once Brexit has been completed.
Why is the stock market benefiting while the pound suffers?
There was better news on the FTSE 100 Index, which climbed to a 16-month high following Theresa May's announcement on Sunday.
However, there is uncertainty among many major employers about long-term investment decisions due to Brexit. "And we will be free to pass our own laws", said May, according to The Telegraph.
May was cheered when she said that existing workers' legal rights introduced under European Union legislation will continue to be guaranteed in Britain, adding that those rights would continue "as long as I am prime minister".
"I think we must go into this negotiating period with a realistic expectation of the turbulence that there could be during the negotiations". Her speech was also a strong statement of intent for Brexit negotiations with the EU.
May's speech signalled to the markets that its full steam ahead towards "hard Brexit" - basically the new PM is unwilling to sign a deal that will limit Britain's ability to curb immigration in exchange for full access to the single market for British business.