Pound value plunges 6% in 2 minutes in mysterious flash crash ; Sterling plunged more than 6% to $1.1841 in two minutes
The British pound has suffered a sudden collapse hitting a new 31-year low against the US dollar in mysterious circumstances, sparking market chaos in “insane” early trading.
The drop was sterling’s biggest since Britain voted to leave the EU in June.
Sterling plunged more than 6 per cent to $1.1841 in two minutes, prompting traders to speculate about a possible trigger.
As the currency recovered to $1.23, still 1.5 per cent down from late US levels, there was speculation a technical glitch or human error had sparked a rash of computer-driven orders.
Naeem Aslam, chief market analyst of Think Markets, said the fall was an indicator of how low the currency could still go.
“What we had was insane – call it flash crash but the move of this magnitude really tells you how low the currency can really go,” said Naeem Aslam, chief market analyst of Think Markets, in a note, according to Bloomberg.
“Hard Brexit has haunted the sterling,” he added.
The incident happened in early hours when there is very little pound trading going on.
Thismeans that any sell-off will have a bigger impact than during busy hours.