Sterling recovered and government bond futures fell back on Wednesday, after an assailant was shot outside the UK parliament by police, and at least a dozen people were injured.
British police said they were treating the incident as a terrorist incident until they knew otherwise.
Sterling had hit the day's lows against the dollar and euro initially, while bond futures hit the day highs, but both had reversed those moves by 1537 GMT (11.37pm Thailand time).
Having fallen to as low as $1.2424, sterling was trading at $1.2460, down just 0.1% on the day, and up from the $1.2451 level at which it had been trading before news of the incident broke.
Having also hit the day's low of 87 pence per euro, sterling recovered to trade at 86.83 pence.
"It's all very unclear at the moment. Obviously there was a knee-jerk reaction, sterling sold 30 pips lower," said Chris Hawkes, an FX dealer at ETX Capital.
"It's now trading back up and I think that's basically on the news that it looks as though the initial threat has been nullified."