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Shares in Scotland-based companies were also hit after a weekend poll put the pro-independence campaign ahead.
Overall the FTSE fell 0.3% to 6834.77.
Shares in Standard Life and RBS, both with headquarters in Scotland, fell sharply and despite recovering some ground, both ended the day more than 2% lower.
"Be afraid, be very afraid," said the note to investors put out by Deutsche Bank's analysts.
Over the weekend a poll suggested those in favour of independence had taken a narrow lead for the first time.
"The pound is predictably taking a hit, my base case is still that there won't be a split but should there be a yes vote the pound will look vulnerable because of the 12-18 months of uncertainty that would lie ahead," said Neil Williams, chief economist at the UK-based fund manager Hermes.
Shares in the printing company De La Rue jumped more than 4% after the Bank of England said it had chosen the firm as its preferred bidder for the contract to print its plastic banknotes.