By Gregor Stuart Hunter

China's yuan daily fix has biggest 1-day depreciation since last year's devaluation

Pressure on the British pound intensified on Monday amid a volatile trading session for currencies in Asia, after the U.K. voted to leave the European Union on Friday and its currency closed at its lowest levels in more than 30 years.

In early trading in Europe, the British pound fell 2.6% to $1.3321 against the U.S. dollar. The euro fell 0.62% to $1.1046 against the U.S. dollar.

British Chancellor of the Exchequer George Osborne issued a statement (http://www.marketwatch.com/story/osborne-says-uk-in-position-of-strength-as-he-tries-to-reassure-markets-2016-06-27) meant to reassure financial markets an hour before the British markets opened.

"The Treasury, the Bank of England, and the Financial Conduct Authority have spent the last few months putting in place robust contingency plans for the immediate financial aftermath in the event of this result," said Osborne.

The comments boosted sterling briefly, from $1.338 to around $1.345, before it fell back to $1.339 by 9 a.m. London time, or 4 a.m. Eastern Time.

"Both pairs have been under pressure since the open today on the back of continuing general uncertainty for the euro and the U.K. downgrade announced late Friday night," said Simon Winn, Hong Kong-based head of sales for Asia Pacific at EBS, the electronic currency-trading arm of inter-broker dealer ICAP.

On Friday, Moody's Investors Service lowered its ratings outlook (http://www.marketwatch.com/story/uks-sovereign-credit-rating-outlook-lowered-to-negative-at-moodys-2016-06-25) on the U.K. to "negative" from "stable."

"Volumes are significantly above usual expectations across the board," Winn said, with demand seen for safe-haven currencies like the Japanese yen.

Asian currencies

Currencies in Asia also experienced volatility. The Japanese yen strengthened 0.3% to 101.907 against the U.S. dollar, while the Korean won weakened 1.1% to 1,183.4 against the U.S. dollar.

The Chinese yuan fell to its weakest level against the U.S. dollar since late 2010, after the biggest one-day depreciation of the currency's daily fixing (http://www.marketwatch.com/story/china-eyes-yuan-stability-as-brexit-shakes-up-plan-2016-06-27) since last year's shock devaluation in August. The onshore yuan last traded 0.4% weaker at 6.6388 against the U.S. dollar.

The lack of clarity from the U.K. after the vote undermined market confidence, said Tim Kelleher, head of institutional foreign-exchange sales at ASB Bank in New Zealand, a unit of Commonwealth Bank of Australia.

"The market is still taking a negative view on everything," he said. "People have had time to think about it, and it's raised more questions than answers."

The U.K. is facing a vacuum at the top levels of its leadership, with the ruling Conservative Party debating who will succeed David Cameron as prime minister following his resignation Friday.

The opposition Labour Party, meanwhile, was facing its own leadership challenge after 12 members of leader Jeremy Corbyn's shadow cabinet resigned.

(END) Dow Jones Newswires

June 27, 2016 05:08 ET (09:08 GMT)

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