Pound falls sharply in ‘flash crash’ during Asian trading!

Pound falls sharply in ‘flash crash’ reports LLNH

Pound falls sharply in ‘flash crash’ during Asian trading!

Sterling suffered a rapid decline that has been referred to as a ‘flash crash’ in the early hours of trading today. A few minutes of chaos during Asian trading sparked a plunge in Sterling to a 31-year low.

Despite recovering some of the losses this morning, the dramatic fall demonstrates the current lack of appetite for the pound as well as the high levels of volatility in currency markets.

With this latest 6% decline, the pound, which has dropped 16% since the referendum, is now 2016’s worst performer among 31 major currencies tracked by Bloomberg.
Mystery still surrounds the exact reason for the sudden sell off with some traders believing that it could be down to a ‘fat finger’ error from a trader or a computerised chain reaction triggered by trading algorithms.

Others believe that an article in the FT in which French President, François Hollande was quoted saying that the UK would have to “suffer” for the Brexit vote in order to ensure EU unity, was the real cause.

With markets now anticipating a ’hard’ Brexit for the UK the question remains; how far will Sterling recover from these latest falls, or are there further shocks for the currency still to come?