Pound sterling falls to new low against the dollar in Asia trade

The pound hit another new low as the euro also fell as the yen strengthened

The pound is continuing its slide as a result of anxiety over the economic implications of Brexit (Getty Images)

The pound sank to a fresh 31-year low as Britain’s vote last month to leave the European Union sent investors seeking haven assets, boosting the yen and pushing global bond yields to record lows.

The British currency breached lows reached in the immediate aftermath of the UK’s June 23 referendum, while Japan’s currency climbed at least 0.6 per cent against all 16 of its major counterparts.

M&G Investments suspended a £4.4 billion real-estate fund on Tuesday, following on the heels of Aviva Investors and Standard Life Investments after a flurry of redemption requests.

The pound continues to slide against the dollar after Brexit (Bloomberg)

The 10-year US Treasury yield fell to a record, while yields on longer-dated Japanese government bonds sank to unprecedented levels.

“There is little to stop the pound’s slide in the near term,” said Peter Dragicevich, a foreign-exchange strategist at Commonwealth Bank of Australia in London.

“History shows that broad-based downward adjustments in the currency are pronounced and drawn out.”

The pound declined 0.9 per cent to $1.2930 as of 8:11am in London on Wednesday, after reaching a 31-year low of $1.2798. The yen rose 0.6 per cent against the dollar to 101.10, after climbing to 100.58, its highest since June 24. It gained 0.8 per cent on Tuesday.

The euro fell 0.2 per cent to $1.1050.

Japan’s Topix index of shares fell 2 per cent as risk aversion torpedoed Asian equity markets.

Japanese Prime Minister Shinzo Abe said on June 28 that the government will carefully watch currency movements, and that he asked Bank of Japan Governor Haruhiko Kuroda to co-operate with Group-of-Seven nations to secure market liquidity.

“The yen strengthened in anticipation of further declines in Japanese stocks,” said Toshiya Yamauchi at Ueda Harlow Ltd., a margin-trading services provider in Tokyo. “Risks to further upside in the yen are growing and it may test the 100 level to see how the authorities respond.”

© 2016 Bloomberg