Flash crash of the Pound baffles traders with algorithms being blamed

(Oct 7): The pound plunged as much as 6.1% against the dollar, the biggest decline since the day the UK’s Brexit referendum result was announced, in a move that traders said was exacerbated by computer-initiated sell orders.

Sterling sank as low as US$1.1841 ($1.63) in early Asian trading, according to data compiled by Bloomberg, the lowest since March 1985. The pound pared the drop to trade 1.5% weaker at US$1.2428 at 11.21am in Tokyo.

Some traders saw the possibility of human error, or a so-called “fat finger,” with algorithms adding to selling pressure at a time of day where liquidity is typically low.

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