Investing.com - The dollar rallied over 1% to fresh three-month highs against the other major currencies on Monday, as the U.K. decision to leave the European Union continued to weigh heavily on risk sentiment.
GBP/USD was down 3.70% at a fresh 31-year low 1.3170.
The pound had briefly steadied earlier following falls in the Asian session after U.K. Chancellor George Osborne sought to reassure markets alarmed over the consequences of Brexit.
Osborne said the vote to leave the EU was likely to lead to further volatility in financial markets but claimed that the economy is as strong as it could be to face the challenges ahead.
Sterling has tumbled amid fears that the decision could hit investment in the U.K. economy, threaten London's role as a global financial capital and trigger months of political uncertainty.
Former London mayor and leading Brexit proponent Boris Johnson is soon expected to declare that he is running to lead the Conservatives, replacing Prime Minister David Cameron who resigned on Friday.
The Brexit vote could also lead to a breakup of the U.K., with Scotland now highly likely to hold a second independence referendum.
EUR/USD tumbled 1.22% to 1.0979, off Friday’s three-month trough of 1.0908, while EUR/GBP rallied 2.60% to 0.8338, the highest since March 2014.
USD/JPY declined 0.56% to 101.66 after falling to lows of 99.15 on Friday, the weakest level since November 2013. GBP/JPY plummeted 4.27% at 133.88, close to Friday’s three-and-a-half year low of 133.31.
Traders remained focused on whether Japan would take any action to weaken the yen if it continued to strengthen.
Japanese Prime Minister Shinzo Abe told Finance Minister Taro Aso on Monday to watch currency markets "ever more closely" and take steps if necessary in the wake of the Brexit vote.
Meanwhile, USD/CHF rose 0.37% to 0.9769.
The Australian and New Zealand dollars were lower, with AUD/USD down 0.96% at 0.7390 and with NZD/USD retreating 1.18% to 0.7050.
Markets shrugged off official data on Monday showing that New Zealand’s trade surplus widened to NZ$358 million in May from NZ$292 million the previous month. Analysts had expected the trade surplus to narrow to NZ$164 million last month.
Elsewhere, USD/CAD added 0.27% to trade at 1.3042.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was up 1.16% at a fresh three-month high of 96.73.