Sterling fell to the day's low against the dollar and a six-day low versus the euro on Wednesday after loud bangs were heard outside Britain's parliament.
Police said they were called to a firearms incident on Westminster Bridge near parliament.
Sterling fell to $1.2424, down from around $1.2451 and leaving the currency down around 0.4 percent on the day.
The pound also hit a two-month low of 137.77 yen, down over 1 percent against the safe-haven Japanese currency.
The pound also hit the day's low of 87 pence per euro, also down 0.4 percent on the day.
British 10-year government bond yields fell to a more-than-two-week low of 1.175 percent. Gilt futures hit a session high.
Britain's blue-chip FTSE 100 index remained broadly unchanged, down 0.9 percent, as was the more domestically-exposed mid-cap index, down 1 percent.