The pound has tumbled to a fresh 31-year low, at one point dipping below $US1.28, on fears Brexit will hit Britain's property market and the prospect of cuts in Bank of England interest rates.
The pound, one of the main vehicles through which financial markets can express concern about Britain's decision to leave the European Union, fell as low as $US1.2798 in Asian trading, its lowest since June 1985.
It recovered to about $US1.2891 in afternoon trading in London.
That still left it more than 13 per cent weaker than it was before the June 23 referendum, and about 1 per cent lower on the day.
Worries have grown in the past two days about financial stress.
The Bank of England warned on Tuesday of threats to financial stability, pointing out the effects on property markets.
Trading has now been suspended in six of Britain's biggest property funds as investor redemptions rose.
Among the property funds to announce a suspension in customer withdrawals was M&G, the fund management arm of insurer Prudential, which made the announcement after the London market close on Tuesday.
The Bank of England also expressed concern on Tuesday about a fall in investor demand for British assets, which could make it harder to finance the current account deficit, putting more pressure on the pound.
Money markets now price in a good chance of a cut in one or more of the BoE's official interest rates to zero within the next three months, possibly as early as next week.
A Reuters poll of more than 60 foreign exchange strategists forecast the pound at $US1.27 by year-end from Monday's close of around $US1.30, but the latest decline has left some traders talking about a weakening past $US1.20.
Yields on British 10-, 20- and 30-year government bonds sank to record lows, extending their slide since the day after the shock referendum result.
The yield on 10-year gilts fell as low as 0.724 per cent, almost half its level on June 23, when Britons were voting in the referendum which many investors had expected to keep Britain in the EU.
