Investing.com -- GBP/USD fell sharply on Monday touching down to fresh 31-year lows, S&P lowered the U.K.'s credit rating, placing further downward pressure on the sliding Pound in the aftermath of last week's surprising decision by U.K. voters to approve a measure to leave the European Union.
The currency pair stood at 1.3228 at the close of U.S. afternoon trading, down 0.0246 or 1.57% on the session. Since eclipsing 1.50 in the final hours of Brexit polling last Thursday, the Pound Sterling has crashed more than 11% against the U.S. Dollar. At session-lows, GBP/USD fell to an intraday low of 1.3126, its lowest level since September, 1985.
In London, U.K. prime minister David Cameron took steps to calm voters nationwide and markets overall, days after last week's shocking result in the controversial Brexit referendum. Addressing Parliament on Monday afternoon, Cameron emphasized that while the result of the referendum was not the outcome he preferred, it is a decision that he will respect along with the rest of his cabinet. Cameron also said that the U.K. has created a new civil service designed specifically for withdrawal discussions from the EU. While Cameron said last Friday that he plans to leave office by October, his administration announced on Monday that a new prime minister will be put in place by September 2. Cameron emphasized that the domestic economy remains on solid footing due to low, stable inflation and a comparatively low unemployment rate.
In addition, he told Parliament that the financial system is "substantially more resilient" than it was six years, as capital requirements remain 10 times higher than from the Financial Crisis. The U.K. prime minister also reiterated that the Bank of England has set aside an additional £250 Billion in liquidity to support the nation's banks and financial markets.
"It is clear that markets are volatile, some companies are considering their investments and we know this will be far from plain sailing. However, we should take confidence from the fact that Britain is ready to confront what the future holds for us from a position of strength," Cameron said in his speech.
Shortly after, though, the Pound slid further after Standard & Poor's lowered its credit rating on U.K's sovereign debt from AAA to AA, as it weighed the possibility of future contagion effects if other nations in the EU decide to leave the European bloc. In lowering its outlook for U.K. bonds to negative, S&P cited heightened risks of market deterioration on external financial conditions, as well the wider constitutional issues surrounding a potential U.K. departure by Northern Island or Scotland. In last week's referendum, Scotland voters backed the Remain campaign by a 62-38% margin, triggering concerns that the country could look to leave the U.K. in the coming months.
As major banking stocks in the euro area completed their largest two-day sell-off on record, investors sought safety in Gold, government bonds and the U.S. dollar. Yields on the UK 10-Year fell below 1% to all-time record-lows, while yields on the U.S. 10-Year dropped to an intra-day low of 1.434%, falling to their lowest levels in four years.
The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rallied by more than 1% to hit a fresh three-month high at 96.86, before falling back to 96.55 at the close of the U.S. afternoon session. Despite the stellar two-day rally, the index is still down more than 3% since early-December.