‘Flash crash’ pummels British pound down 6% in two minutes
LONDON — The British pound endured one of its biggest falls ever Friday — with some in the markets blaming trading robots or a fat-fingered typo for sending the currency down 6 percent in just a couple of minutes.
For one of the world’s major currencies, that’s a huge move, matched only by the pound’s fall in the wake of Britain’s June 23 Brexit vote to leave the EuropeanUnion.
Early Friday, the pound tumbled from $1.2600 to $1.1789 in the space of two minutes, according to financial data provider FactSet. It recovered since to trade at $1.24. Still, that’s a level the currency hasn’t seen since 1985 and way down on where it started the week, just below$1.30. The Bank of England is investigating a “flash crash” that hit Friday. Above, a British 20-pound note.
The crash occurred during a “twilight period” in the markets — after the close in the U.S. and just as Asian traders were starting their day. That means the volume of tradingwas likely lower than usual.
Various reasons have been cited. Some say a trader made a fat-finger mistake while typing in an
order. Others say it could have been an automated trading algorithm that makes decisions based on newswebsites or social media, or comments by France’s president, Francois Hollande, who said Britain should pay for its decision to leave the 28-nation EU.
The Bank of England is investigating.