Pound drops to a new 31-year low, trading below $1.32
The drop reflects investors' concerns about the economic impact of Britain's departure from the European Union.
The pound has dropped to a new 31-year low, trading below $1.32 for the first time since 1985. By midday in London it was at $1.3216.
The drop reflects investors' concerns about the economic impact of Britain's departure from the European Union. It also shows they are expecting the Bank of England to cut interest rates in coming months as the economy suffers.
The Bank of England had until recent weeks been expected to consider raising interest rates this year, but analysts say it is now more likely to cut them by a quarter point before the end of the year. Lower rates tend to weaken a currency.
Investors also fled to the perceived safety of bonds. The yield on the 10-year British government bond fell below 1 per cent for the first time ever to hit a record low of 0.96 per cent. The yield drops as the price of a bond rises.