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    GBP/USD pares losses after falling below 1.28 for first time in 31 years

    - GBP/USD pared most of its losses on Wednesday after touching down to fresh 31-year lows, as foreign exchange traders reacted to relatively dovish minutes from the Federal Reserve and continued uncertainty related to last month's Brexit decision.

    At session-lows, the British Pound fell to 1.2797 against the U.S. Dollar, tumbling below 1.28 for the first time since 1985. The Pound Sterling rallied several hours later to re-test the 1.30 level, before closing the U.S. afternoon session at 1.2961, down 0.0029 or 0.25%. Since eclipsing 1.50 in the final hours before Brexit polls closed on June 23, GBP/USD has tumbled more than 13%. Days earlier, billionaire investor George Soros warned that the Pound could crash as much as 20% if the Leave campaign prevailed.

    Investor sentiment toward the Pound remained weak on Wednesday after Henderson and Columbia Thread Needle became the latest major U.K. property funds to halt redemptions, citing exceptional liquidity pressures in the wake of the Brexit vote. It followed similar moves by M&G Property Portfolio, Aviva (LON:AV) and Standard Life (LON:SL) in recent days. In total, leading U.K. commercial property funds have locked up approximately £13 billion in investments, according to The Guardian. The actions exacerbate fears that commercial property values nationwide will fall precipitously if the U.K. decides to invoke Article 50 of the Lisbon Treaty, triggering a two-year formal process to leave the European Union.

    Meanwhile, market players continued to pile into safe-haven assets such as Gold, government bonds and the Japanese Yen, amid extreme volatility throughout global financial markets. Yields on the 10-Year U.S. Treasuries and the U.S. 30-Year fell to intraday lows of 1.321 and 2.098% respectively, each touching down to all-time lows. In Denmark, yields on the Danish 10-Year fell below zero for the first time on record, while yields on the Swedish 10-Year inched down to 0.101 after the Riksbank cautioned that it could lower rates deeper into negative territory over the next two years.

    The Dollar remained relatively unchanged against the Pound after the Federal Open Market Committee (FOMC) released the minutes from its last meeting on June 14-15. According to the minutes, the Committee felt it would be prudent to wait for the outcome of the historic Brexit referendum eight days later in order to "assess the consequences" of the vote on global financial markets. At the same time, most participants noted that a potential Brexit "could generate financial market turbulence," that could adversely impact U.S. domestic economic performance in the months ahead.

    While Fed officials remained divided on the timing of their next rate hike, most participants judged that conditions could be appropriate for further tightening if economic growth picked up, the labor market showed improvement and inflation moved closer to its 2% goal. Notably, Fed governor Daniel Tarullo said earlier on Wednesday that the Fed could avoid raising rates until inflation hits its targeted objective.

    The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, hit an intraday high of 96.62, before falling to 96.13 (down 0.15%) at the close of U.S. afternoon trading. Although the index is up by more than 2.5% since the Brexit outcome, it is still down approximately 4% from its peak of 100.55 in early-December.

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