The British pound plummeted to a new 31-year low on Wednesday, overwhelmed by continued fears over the U.K. leadership vacuum and the country's potential exit from the European Union (EU).
The pound crumbled to as low as 1.2796 against the dollar during Asia trade on Wednesday, it's lowest since 1985, after ending Tuesday's trade around 1.2960. Cable later recovered to trade above 1.2900.
Analysts grew concerned that the continued political uncertainty will weigh on capital inflows and spur companies to delay investments, potentially tipping the economy into a recession.
The Bank of England (BOE) has begun taking preemptive steps to protect the British economy in the wake of June 23 U.K. referendum vote to leave the European Union (EU).
On Tuesday, BOE Governor Mark Carney told cautious British bankers' that they needed to start lending more money. The central bank cut the amount of capital it required banks to hold in reserve, which freed up an extra 150 billion pounds ($196 billion) for lending.
Carney had previously signaled more monetary easing would likely be put in place in the near term.
Markets in Asia tumbled lower on Wednesday, as investors scurried into safe-haven plays on global growth concerns, sending bond yields to record lows.
EUR/GBP jumped as high as 0.8625 overnight while GBP/JPY fell to 128.40.
