'Fat-finger' error seen as sterling slumps; Asian shares dip

Sterling plunged to a three-decade low in thin early Asian trade on Friday as a break of key technical support levels triggered a wave of stop-loss orders. The pound fell almost 10 percent at one point to USD 1.1378 before stabilising around USD 1.2415, still down 1.5 percent from late US levels, leaving traders scratching their heads in the absence of news or market events that would justify such a move. 

 

"This was even a bigger move than what we saw after the Brexit vote. There was almost no offer, no bids when this happened," said a trader at a European bank in Tokyo. A "fat finger" error triggering the automatic stop-loss orders was seen as a possible culprit. 

 

"The move coincided with an FT (Financial Times) story about French President Hollande demanding tough Brexit negotiations.The move was exacerbated once stops were tripped below a key level of USD 1.2600 in very thin trading before the US payrolls," said Su-Lin Ong, senior economist at RBC Capital Markets in Sydney.

 

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