The dollar held steady near one-week highs against the other major currencies on Wednesday, as mounting concerns over the global ramifications of the Brexit vote prompted investors to flock to safer assets.
GBP/USD dropped 0.60% to 1.2941, just off fresh 31-year lows of 1.2797 hit overnight.
The pound came under broad selling pressure after the Bank of England warned on Tuesday of “challenging” risks to financial stability following the Brexit vote and eased regulatory requirements on the banking sector.
BoE Governor Mark Carney said the move represented a "major change" that would help the economy to cope with the Brexit consequences.
In its bi-annual financial stability report, the BoE said the risks it had feared ahead of the Brexit poll had started to materialise, as sterling plunged to 31-year lows and as financial stocks tumbled 20%.
Carney had already signaled last week that more stimulus may be needed over the summer, sparking expectations for a rate cut at its August policy meeting.
EUR/USD slipped 0.20% to 1.1053, while EUR/GBP gained 0.42% to trade at a 35-month high of 0.8540.
Earlier Wednesday, data showed that German factory orders were flat in May, disappointing expectations for an increase of 1.0%. Factory orders fell 1.9% in April, whose figure was revised from a previously estimated decline of 2.0%.
USD/JPY tumbled 1.19% to 100.53, while USD/CHF rose 0.29% to 0.9795.
The Australian dollar was higher, with AUD/USD up 0.13% at 0.7472, while NZD/USD dropped 0.55% to 0.7114.
Elsewhere, USD/CAD held steady at 1.2981.
The U.S. dollar index, which measures the greenback’s strength against a trade-weighted basket of six major currencies, was little changed at 96.30, after rising to a one-week high of 96.55 earlier in the day.
Market participants were also looking ahead to the minutes of the Federal Reserve’s most recent policy meeting, due later in the day, for possible hints on the central bank’s next policy moves.