The British pound suffered a sudden fall of more than 6 per cent against the US dollar early on Friday before recovering most of its losses, amid mounting concerns over the UK’s exit from the EU.
Shortly after currency markets opened in Asia on Friday, the pound lost as much as 6.1 per cent to $1.1841 in two minutes. The shortlived drop sparked speculation that it could have been triggered by a mistaken “fat finger” trade or a rogue automated algorithm, exacerbated by thinner liquidity during early Asian hours.
It was the currency’s lowest level since May 1985 and the biggest intraday drop against the dollar since its 11.1 per cent plunge on June 24 in the wake of the UK’s vote to leave the EU.
Although sterling quickly bounced back, it was still trading down 1.8 per cent at $1.2381 in London afternoon trading, well below the $1.26 levels it was holding at before the plunge. Against the euro, the pound was 2.1 per cent weaker, with £0.9018 required to buy a unit of the single currency.