Sterling Drops to its Lowest in 31 Years

The sterling dropped to its lowest in more than 30 years against the US dollar, after the Bank of England warned of the impact of Brexit on the economy.

The British currency plunge below the June 24 low to reach a new low in 31 years, indicating global risks caused by Brexit has begun to materialize and could worsen as investors scramble for safe haven assets to avert catastrophe.

At least the yen has risen about 1 percent on Wednesday to trade at 100.52 against the US dollar.

“The yen’s gain comes as investors see less reason to buy the dollar as there is no end in sight for the downside to the pound and bond yields,” said Masashi Murata, a vice president at Brown Brothers Harriman & Co. in Tokyo. “How much damage the U.K. economy will incur remains to be seen, but it’s not positive for the pound. It has more downside.”

During the Asian session, the pound lose about 1.3 percent of its value to $1.2790 as of 12:05 a.m. Tokyo. While the yen is expected to strengthen further as demand for safe haven assets increase.

“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.”