The pound plunged as much as 6.1 percent against the dollar, the biggest decline since the day the U.K.’s Brexit referendum result was announced, in a move that traders struggled to immediately explain.
Sterling sank as low as $1.1841, according to data compiled by Bloomberg, the lowest since March 1985. The pound quickly pared the drop, trading 1.1 percent weaker at $1.2472 at 9:26 a.m. in Tokyo. Traders questioned whether computer-driven orders had triggered the plunge, exacerbated by a lack of liquidity in early Asian hours, while some saw the possibility of human error, or a so-called “fat finger.” Others pointed to a Financial Times article citing French President Francois Hollande as saying the U.K. must suffer the consequences of leaving the European Union.
“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," Naeem Aslam, chief market analyst of Think Markets wrote in a note. “Hard Brexit has haunted the sterling.
