Automated sell-offs in Asia caused a “flash crash” on sterling in early trade, pushing the currency down around 10 percent.
Sterling dived from levels around $1.2600 to $1.1378, but has since recovered ground. The crash was triggered by a statement by French President Francois Hollande in the Financial Times, vocalising his desire to stay firm with Britain as Brexit negotiations begin.
“Of course, some in the market may see sterling’s overnight volatility to be the result of French President Hollande demanding tough Brexit negotiations,” Hans Redeker, head of currency strategy at Morgan Stanley, told Reuters.
“The new British government under May appears to have chosen an economic course which could bear substantial risks.”
The pound has been consistently weak since the UK voted to Leave the European Union, trading at its lowest level since 1985 earlier in the week after Theresa May pledged to prioritise immigration over the single market as Brexit negotiations begin.
The pound is currently trading at $1.23 to the dollar, down 0.21 percent.
07/10/2016
