The pound crashed 6% in 2 minutes overnight in a 'flash crash'
By HONG KONG/TOKYO, Oct 7 (Reuters) - Sterling plunged to a three-decade low in Asian trade on Friday in a suspected "flash crash" and amid growing fears of a "hard" exit by Britain from the European Union.
The pound nosedived over 6% at one point to $1.1378 after crashing through key support levels and triggering a wave of selling. Traders blamed a so-called "flash crash," where trading algorithms mess up and cause sharp moves in stocks or shares.
But it quickly bounced and is down just 1.24% at 7.00 a.m. BST (2.00 a.m. ET):
Investing.com
The pound has come under renewed pressure as fears grow that Britain's divorce from the EU will be messier and costlier for the economy than expected. UK Prime Minister Theresa May on Sunday set a March deadline for the formal departure process from the EU to begin.
"The whole thing's been on a precipice since Sunday, since Theresa May (pointed to) March Brexit negotiations, " said Sean Callow, senior currency strategist at Westpac in Sydney. "But the selling has been very substantial so you can only think it'ss been part of that general punishment of the pound for Brexit,"
"I think we've underestimated how many people had money positions for a very wishy-washy Brexit or even none. May's comments have really just started the cleanout and we just haven't seen any sign of bouncing."
While sterling's move broadly coincided with some news reports that Britain's separation from the eurozone may be a tough process, some traders blamed it on a possible a "fat finger" error triggering automatic stop-loss orders.
"A few stops got triggered in early trading and once cable broke 1.20, option barriers sent it lower," said Gerrard Katz, head of Asian FX sales and trading at Scotiabank said. "The broader market impact has been limited and cable should consolidate between the 1.20 and 1.25 levels."
Britain's finance minister Philip Hammond tried to reassure jittery markets on Thursday, saying the UK economy was fundamentally strong, but he acknowledged that next year will be "turbulent."
The pound suffered a similar crash against the euro but likewise has recovered. Here's how sterling looks against the euro at 7.05 a.m. BST (2.05 a.m. ET):
Investing.com
- 6 reasons why you should visit Ladakh this summer
- TVS iQube gets a new variant priced under ₹1 lakh, ST variant gets a bigger battery
- As English players begin their premature IPL exodus, Gavaskar calls for action against England Cricket Board
- Top 10 destinations for river rafting in India in 2024
- Should you enrol your child in an online university like IGNOU?
- Nothing Phone (2a) blue edition launched
- JNK India IPO allotment date
- JioCinema New Plans
- Realme Narzo 70 Launched
- Apple Let Loose event
- Elon Musk Apology
- RIL cash flows
- Charlie Munger
- Feedbank IPO allotment
- Tata IPO allotment
- Most generous retirement plans
- Broadcom lays off
- Cibil Score vs Cibil Report
- Birla and Bajaj in top Richest
- Nestle Sept 2023 report
- India Equity Market