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Business

Pound under pressure after Friday's 'flash crash'

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Business

Pound under pressure after Friday's 'flash crash'

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COMING UP:Pound under pressure after Friday's 'flash crash'

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00:00:01
>> Sterling on the defensive on Monday, down almost a half a percent against the dollar and a little less against the euro. That's after mostly recovering following Friday's flash crash where the pound plunged to a 31 year low. Reuters financial markets chief correspondent Jamie McGeever says last week ended on an unprecedented note for the currency.
00:00:22
>> Sterling had a rollercoaster ride on Friday. It was a huge move, it was a very volatile move and it happened in the early hours of Asian trading, when markets were at their least liquid. At one stage, the pound fell around 6% in two minutes. Now, that is massive.
00:00:37
And in fact, Morgan Stanley published a note on Monday morning saying that on Friday, sterling traded and behaved like an emerging market for currency. Don't forget, this is sterling we're talking about, a G4 currency, and it's trading in a volatile manner. These are quite extraordinary times.>> UK Chancellor, Philip Hammond, and Bank of England Governor, Mark Carney, are looking at what caused the currency to tumble, but there's not doubt that Brexit looms large.
00:01:02
>> Everyone knows it's coming, but of course, now we know that the starting gun has been fired and the negotiations for Brexit will start in March. So we have a starting date, if you like. Investors and markets were spooked by that. They took fright and especially some of the rhetoric coming from the Conservative Party conference about the shape and the form that Brexit might take, i.e., a hard Brexit with the UK losing access to the single market.
00:01:29
Markets do not want to hear that and so they've sold the pound accordingly.>> Sterling is on for its second worst year since the 1970s. It dipped below $1.20 last week and although Monday saw a slight recovery, many investors fear it could do it again in the months ahead.
00:01:46
Some forecasters, like HSBC, are even calling for $1.10, almost parity with the US dollar.