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| Pound value: Sterling struggles to recover from flash crash as investors brace for further falls | Pound value: Sterling struggles to recover from flash crash as investors brace for further falls |
| (about 1 hour later) | |
| Investors are braced for sterling to fall further as the currency struggles to recover following Friday’s flash crash, amid fears continued volatility will result from the Government’s “hard Brexit” stance. | Investors are braced for sterling to fall further as the currency struggles to recover following Friday’s flash crash, amid fears continued volatility will result from the Government’s “hard Brexit” stance. |
| The Bank of England has confirmed that it will investigate the cause of a sharp fall in the value of the pound, which plunged in mysterious circumstances in overnight trading in Asia on Friday. The pound fell as much as 6 per cent to $1.1841 – the most aggressive move since the results of the Brexit vote emerged in June – before recovering to $1.24 against the dollar. | The Bank of England has confirmed that it will investigate the cause of a sharp fall in the value of the pound, which plunged in mysterious circumstances in overnight trading in Asia on Friday. The pound fell as much as 6 per cent to $1.1841 – the most aggressive move since the results of the Brexit vote emerged in June – before recovering to $1.24 against the dollar. |
| On Monday, the pound was back under $1.24 at $1.23828 against the dollar at 7.45am - down 0.3 per cent. | |
| Sterling shed more than 4 per cent last week in its worst weekly performance since the EU referendum. | Sterling shed more than 4 per cent last week in its worst weekly performance since the EU referendum. |
| The market is now heavily positioned for the pound to fall further. | The market is now heavily positioned for the pound to fall further. |
| Hedge funds increased their bets against the British pound to 102,964 futures contracts in the week to September 27, according to data from the US Commodity Futures Trading Commission. | Hedge funds increased their bets against the British pound to 102,964 futures contracts in the week to September 27, according to data from the US Commodity Futures Trading Commission. |
| Meanwhile, bets on a rising pound were slashed by around one-third during the week to 40,781 futures contracts. | Meanwhile, bets on a rising pound were slashed by around one-third during the week to 40,781 futures contracts. |
| Kathleen Brooks, research director of City Index, said she fears that the talk of a ‘hard Brexit’ has spooked the market, and made the pound ‘toxic’. | Kathleen Brooks, research director of City Index, said she fears that the talk of a ‘hard Brexit’ has spooked the market, and made the pound ‘toxic’. |
| Naeem Aslam, chief market analyst at Think Markets,said he expected the pound to fall to $1.10 against the dollar by mid-2017. | Naeem Aslam, chief market analyst at Think Markets,said he expected the pound to fall to $1.10 against the dollar by mid-2017. |
| Goldman Sachs said its three-month forecast was for the pound to fall to $1.20, while Rabobank revised down its forecast for sterling after last week’s sharp falls and expects the pound to drop to $1.18 by mid-2017. | Goldman Sachs said its three-month forecast was for the pound to fall to $1.20, while Rabobank revised down its forecast for sterling after last week’s sharp falls and expects the pound to drop to $1.18 by mid-2017. |
| HSBC, meanwhile, predicted the pound will fall to $1.10 against the dollar and hit parity against the euro by the end of 2017. | HSBC, meanwhile, predicted the pound will fall to $1.10 against the dollar and hit parity against the euro by the end of 2017. |
| David Bloom, HSBC’s global head of FX, said the currency is now “de facto official opposition to the Government’s policies”. | David Bloom, HSBC’s global head of FX, said the currency is now “de facto official opposition to the Government’s policies”. |
| “The argument which is still presented to us, that the UK and EU will resolve their difference and come to an amicable deal, appears a little surreal. It is becoming clear that many European countries will come to the negotiation table looking for political damage limitation rather than economic damage limitation. A lose-lose situation is the inevitable outcome,” Mr Bloom said. | “The argument which is still presented to us, that the UK and EU will resolve their difference and come to an amicable deal, appears a little surreal. It is becoming clear that many European countries will come to the negotiation table looking for political damage limitation rather than economic damage limitation. A lose-lose situation is the inevitable outcome,” Mr Bloom said. |