In the span of just two minutes in early Asia trading on Friday, the British pound had plunged more than 6 percent, sending one of the most-traded currency on the planet to the lowest level in 31 years. Many analyst around the world were surprised by the mysterious event and it seemed that nothing could explain it. There was talk of France’s president pushing for a hard-line approach on Britain’s exit from the European Union, and recycled rumors of a “fat finger” trade, but nothing that would justify a drop of this magnitude.
While he may never be able to pin down the catalyst for Friday’s drop, many analysts agreed that the sell-off was probably exacerbated by computer-driven traders reacting at speeds faster than any human could muster. Friday’s move in the pound follows a flash crash a similarly unexplained move in New Zealand’s dollar last year and the Swiss franc last year and it seems that such event are happening every year. Not only did the crash happen in just two minutes, but nobody was expecting it.
“This is the most volatile move seen from sterling since Brexit, yet it can be argued that relative to Brexit, this sell-off was more dramatic,” said Matt Simpson, a senior market analyst at ThinkMarkets.
There was some confusion over how low the pound actually fell. Bloomberg reported that the currency has reached the price $ 1.1841, the weakest level since 1985. But reports from other banks showed that sterling can be decreased even more to $ 1.1378.
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