Currency Manipulation – The Fall of the British Pound and Global Implications - TruePublica
CNBC reports: The British pound took a dive on Friday, tanking as much as 6
percent, as traders scrambled to assess the cause of the heavy selling.
The currency fell to $1.1819 in early Asian hours, hitting its lowest
level since 1985—a year when it hit $1.0520 amid an acrimonious mining
industry strike. The currency later recovered [5%] to hover at the $1.24
handle by the afternoon session of Asian trade.
Friday’s fall was the most aggressive since results of the Brexit vote emerged on June 24,
according to spread-betting firm IG. – Market speculation was rife that
the decline was the result of a wrongly entered trade. Because there
was no news so far to justify the pound’s wild swing, it could be the
result of a ‘fat finger’ [mistake], said Elias Haddad, senior currency
strategist at Commonwealth Bank of Australia.
John Gorman, head of non-yen rates trading at Nomura
Securities, said via email that there were two theories floating around.
“First, it was a fat finger or a trade entered mistakenly. The second
possibility, which sounds more reasonable, is that there is a large
barrier option that traded and that caused the selloff in light
liquidity.”
Kathy Lien, managing director of foreign exchange strategy at BK
Asset Management, echoed that view. “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,” she said in e-mailed comments.
