Investing.com -- GBP/USD fell sharply on Tuesday, plunging below 1.30 for the first time in more than three decades, as banking stocks in Britain and the euro area overall continued to tumble, renewing concerns of an impending recession in the wake of last month's surprising Brexit decision.
At session-lows, the British Pound dropped to 1.2997 against the U.S. dollar on Tuesday, extending losses from the immediate aftermath of the Brexit-inspired market shock and falling to its lowest level since 1985. Since eclipsing 1.50 in the final hours before polls closed in U.K. voting on June 23, the Pound has plummeted more than 11% against its American counterpart. Over the same period, the Pound has also slumped more than 10% versus the euro.
On a volatile day of trading, GBP/USD reached session-highs of 1.3283. At the close of U.S. trading, the currency pair traded at 1.3028, down 0.0252 or 1.89% on the session.
In London, Bank of England governor Mark Carney cautioned investors that the risks related to the Brexit vote are "starting to crystallize," less than two weeks after the historic decision. While the BOE announced new rules that will ease capital restrictions on domestic lenders possibly freeing up as much as £150 billion in added liquidity, Carney warned that the bank will not be able to fully offset the expected economic and market volatility that could ensue over the next several months.
Shortly after, a host of leading British property funds suspended trading, amid heightened fears that commercial property values nationwide will fall precipitously if the U.K. eventually decides to depart from the European Union. Aviva (LON:AV), a British savings and investment group, halted trading on Tuesday, one day after Standard Life (LON:SL) became the first firm to freeze its property fund. In addition, M&G's Property Portfolio, Britain's largest commercial property fund, also halted redemptions on Tuesday following a rash of rapid cash outflows.
Elsewhere, currency traders await the release of Friday's highly-anticipated U.S. monthly jobs report for further indications on the strength of the domestic labor market. In May, nonfarm payrolls rose by 38,000, marking the lowest increase in U.S. monthly employment in nearly six years. Analysts expect to see consensus gains of 180,000 in June, an amount which would represent the highest monthly increase in three months.
A strong employment report could convince dovish members of the Federal Reserve to accelerate its timetable for tightening its monetary policy cycle. Last month, the Federal Open Market Committee (FOMC) voted unanimously to leave the target range of its benchmark Federal Funds Rate steady at a range between 0.25 and 0.50%. Notably, the FOMC also lowered its long-term interest outlook through the end of 2018.
Any rate hikes from the FOMC are viewed as bullish for the dollar, as investors pile into the greenback in order to capitalize on higher yields.
Meanwhile, yields on the U.S. 10-Year and U.S. 30-Year fell to intraday lows of 1.357% and 2.131% respectively, each dropping to their lowest levels on record. It came as investors continue to pile into safe-haven assets such as government bonds, Gold and the U.S. dollar to hedge against widespread market volatility.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose more than 0.50% to an intraday high of 96.46, before falling slightly back to 96.27 at the close of U.S. afternoon trading. While the index is up by more than 2.5% since the Brexit referendum, it is still down by approximately 4% from its December highs.