The Great Britain pound demonstrated a flash crash to a new 31-year low today only to recover very quickly. There were different theories about possible reasons for such behavior.
The sterling sank more than 5% but almost trimmed its losses later, and the move happened in a matter of minutes. Some analysts argued that it might be so-called “fat finger” misplaced trade, an error in trading algorithms, or a technical glitch. Others thought that it was a reaction to the comments for French President Francois Hollande, who called for a tough stance on Britain’s exit from the European Union, depriving the country from free access to the shared European market. Meanwhile, economic data released today was below expectations for a change (unlike during the previous trading sessions this week with surprisingly good economic indicators) as production was worse than expected and the trade balance deficit widened beyond the forecast level.
GBP/USD traded at about 1.2444 as of 8:58 GMT today after opening at 1.2614 and sinking to the low of 1.1825. EUR/GBP was up from 0.8837 to 0.8931 following the spike to 0.9292.
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