Pound plunges to a 31-year low as voting begins to replace PM Cameron

The British pound hit a 31-year low of $1.3112 as lawmakers started voting to elect a new prime minister to replace outgoing PM David Cameron who resigned over Brexit.

The pound, which has borne the brunt of market concerns about the economic impact of the vote, slid as much as 1.3 per cent on Tuesday to hit $1.3112, its lowest since September 1985. The latest fall brought the British currency around 12 per cent below its pre-referendum levels.

Bank of England governor Mark Carney tried to calm markets in BoE's semi-annual Financial Stability Report, stating that the fall in the currency should help ease the balance of payments shortfall, helping the sterling to briefly inch higher, but it then gave up those gains to trade down 1.1 per cent on the day by 9.30 pm (EST) at $1.3143.

The BoE report also expressed concern about a fall in investor demand for commercial real estate and other British assets, which could make it harder for the country to finance its large current account deficit.

Standard Life Investments said that it had suspended all trading in its UK real estate fund, one of Britain's largest property funds, after an increase in redemption requests due to uncertainty following the ballot.

It had said last week that it had reduced the value of the fund, which invests in UK commercial real estate assets, by 5 per cent.

Britain's Conservative party is voting for its next prime minister after Cameron resigned in the wake of the UK's shock decision to leave the European Union.

Interior minister Theresa May is the clear frontrunner, pitching herself as a unifying force in a party fractured by last month's referendum that led Britain out of the EU.