Oct 07, 2016 (LBO) – The British pound fell to its lowest level since 1985 in early Asian trade with traders speculating whether it was due to an error trade.
The currency dove as much as 6 percent to $1.1819 and later recovered to $1.24 handle, down 2 percent. Friday’s fall was the most aggressive since results of the Brexit vote on June 24, CNBC reported.
Because there was no news so far to justify the pound’s wild swing, it could be the result of a fat finger (wrongly entered trade), said Elias Haddad, senior currency strategist at Commonwealth Bank of Australia.
Kathy Lien, managing director of foreign exchange strategy at BK Asset Management, said: “It’s a low liquidity sell-off. Typically when we see this, the reversal is violent but with fundamental support, the pound could find a new range between 1.22 and 1.25 per dollar.”
Others suspected an article from the Financial Times revived fears of a “hard Brexit” policy was to blame for Friday’s losses.
“The U.K. has decided to do a Brexit, I believe even a hard Brexit. Well, then we must go all the way through the U.K.’s willingness to leave the European Union. We have to have this firmness,” the FT reported French President Francois Hollande as saying on Thursday.