Flash Crash of the Pound Baffles Traders With Algorithms Being Blamed
- Was the cause ‘a fat finger, or just algos?’ Janus’ Myerberg
- Sterling dives 6.1% in minutes during Asia hours, snaps back
Sterling Flash Crash: Pound as Brexit Shock Absorber
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During two chaotic minutes of Asian trading, the pound plunged the most since the Brexit referendum in June, with traders saying computer-initiated sell orders exacerbated the slump.
The 6.1 percent drop drove sterling to a 31-year low of $1.1841, according to composite prices compiled by Bloomberg of contributions from dealers. Traders speculated the crash might have been sparked by human error, or a so-called “fat finger,” with algorithms adding to selling pressure at a time of day when liquidity is relatively low.