By Shinichi Saoshiro
TOKYO (Reuters) - The pound remained under siege on Monday, sliding back toward a 31-year low as sentiment towards the currency remained in tatters after Britain opted to exit the European Union, triggering shockwaves across global markets.
Sterling was down 1.8 percent at $1.3460 <GBP=D4>, within shot of $1.3228 plumbed on Friday, its lowest since 1985. The pound dropped as much as 11 percent on Friday as positions betting on Britain remaining in the EU were reversed en masse.
The impact from Brexit - which also generated much turmoil in global equity, commodity and bond markets - was expected to grow due to its likely negative effect on the European economic and political landscape.
"The focus now falls on Europe, where Brexit could cause a domino effect of states wanting to leave the union. While this has already been talked about, the main concern for the currency market is European political uncertainty leading to monetary and fiscal policy paralysis," said Junichi Ishikawa, forex analyst at IG Securities in Tokyo.
"As for the pound, it could probe fresh lows. The currency could fall further as the Bank of England may cut interests to support its economy in the wake of Brexit."
Many economists forecast Brexit would at least temporarily reduce UK growth.
The pound was down 1.9 percent against the Japanese currency at 137.50 yen <GBPJPY=R> after reaching a 3-1/2-year low of 133.65 on Friday.
The safe-haven yen was also bullish against the dollar. The greenback was steady at 102.080 yen <JPY=>. The U.S. currency shed 1.8 percent last week when it weakened to as much as 99 yen, its lowest since November 2013.
Market focus was on whether Japan would intervene to arrest the yen's appreciation should the currency gain further.
The Japanese authorities have so far limited their action to verbal warnings.
Japanese Prime Minister Shinzo Abe said on Monday he has instructed Finance Minister Taro Aso to watch currency markets "ever more closely" and take steps if necessary, four days after Britain's historic vote to leave the EU.
The euro was down 0.6 percent at $1.1045 <EUR=> but some distance from $1.0912, a three-month low reached on Friday.
The Australian dollar, vulnerable in times of risk aversion, slipped 0.3 percent to $0.7435 <AUD=D4> after losing more than 2 percent on Friday.
(Editing by Lincoln Feast)