[NEW YORK] Britain's surprise decision to exit the European Union reverberated through the currency market again Monday, hitting the pound especially hard.
Sterling skidded to a new trough of US$1.3121, its lowest level against the US dollar since September 1985, before rebounding somewhat. Shortly after 2100 GMT, the pound was at US$1.3228.
British officials, including Prime Minister David Cameron, sought to send a message of reassurance. Yet both Standard & Poor's and Fitch downgraded Britain, with S&P stripping the country of its coveted triple-A rating.
Nomura predicted a drop in the British currency below US$1.25 or US$1.30 was "very likely" in light of the questions over the British economic outlook.
"The uncertainty generated from a lack of a functioning government in the UK, the lack of a roadmap of a new deal for the UK after its exit from the EU and the lack of clarity around the continuation of the British Union likely will weigh on investment into the UK," Nomura said.
The euro also endured another day of losses against the US dollar, dropping 0.8 per cent from Friday's level to US$1.1022.
The British decision could spark additional stimulus from the European Central Bank as it seeks to boost the economy, further weakening the single currency, said David Song, currency analyst at DailyFx.
"With the UK voting to leave the European Union, other nations may follow suit amid the protracted recovery, and the single currency stands at risk of facing additional headwinds over the near to medium term as the stability of the euro-area comes under scrutiny," Mr Song said.