“Investigations are underway but a single reason may never be identified for last night’s ‘flash crash’,” Mike van Dulken, Head of Research at Accendo Markets, told the AP.
The markets were already on edge with the British government setting a timeline for a break from the European Union in what some see as a potential “hard Brexit.” Discounting the Friday flash crash, the pound has depreciated around 6% against the U.S. dollar since Monday and is on course for its worst weekly performance since the Brexit vote.
SEE MORE: Pound ETF Retreats as Sterling Slips Toward 31-Year Low
Moreover, at almost the same time that the pound began to retreat in early Friday, French President François Hollande warned that allowing the U.K. to get a good deal from the Brexit negotiations might embolden anti-European Union factions, potentially contributing to the price volatility, reports Ben Wright for the Telegraph.
“I think it’s a warning shot from the markets to the UK about what type of potential volatility in sterling we may see down the line,” Shahab Jalinoos, global head of FX strategy at Credit Suisse, told Reuters.
For more information on the GBP, visit our British pound category.