A flash-crash in the Asian session saw the Pound drop dramatically across the board.
Sterling dropped as much as 6% against the US Dollar and recorded similar losses against the Euro, Australian Dollar and New Zealand Dollar.
GBP EUR is currently trending at its
lowest levels since 2011
, with GBP USD languishing at rates not seen
since 1985
.
While this latest Sterling slump is believed to have been triggered by an automated trading systems error, the Pound was already significantly lower than the week’s opening levels as a result of PM Theresa May’s intimations that
the UK will give up access to the single market
in order to implement tighter controls on immigration.
The Pound reversed an initial recovery and extended losses after UK Industrial Production, Manufacturing Production and Trade Balance reports all came in below forecast levels.
Before Brexit, analysts forecast that the
Pound Euro exchange rate could hit parity
within a year and these latest shifts have taken Sterling several steps closer.
TorFX Account Manager John Cameron commented; ‘Last night’s Asian session brought a sharp bout of selling pressure on the Pound Sterling. The move against the UK tender was relatively short-lived, but was enough to send the Pound US Dollar exchange rate
below the 1.2000 threshold
for the first time since the middle part of the 1980s.
Analysts were quick to suggest that the spike lower – sometimes referred to by market participants as a ‘Flash Crash’ – was caused by a cascade of automated orders triggering.
Many FX insiders feel
there could be further downside to come
for the UK unit. Legendary FX insider Jim Rogers – former business partner of George Soros – recently forecast below parity for the Pound Sterling Dollar (GBP USD) exchange rate as well as GBP EUR. Time will tell.’
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