Britons fear 'Hurricane sterling'

Britons fear 'Hurricane sterling'

World October 8, 2016 06:03

- The terrifying two minutes in which the pound early Friday by a further 6% fell against the dollar, holding London and the foreign exchange market in its grip.

Traders guessing since then to whom this fall has put in motion. They fear the Brexit and such valutatik.

The pound slumped in recent weeks and plummets to Friday to a thirty-year low. 'Flash Crash', is the explanation between traders on their screens.

Which refers to the preset codes, algorithms, computer software hitting a single event of the boil. Watch sharp price spikes. The market immediately think back to March 6, 2010, the Dow Jones dropped over in minutes with 998.5 points, 9% market value evaporated, thanks to some flash crash.

Because algorithms now except respond to programmed numbers, but also combinations of words on Twitter, moves the gaze to early news.

Thursday to Friday in Asia responds trading on statements by French President Hollande in the Financial Times. He would make for tough negotiations with EU emerging British.\n  \n  \n   advertisement

That means years of wrangling and little investment. On the first price decline in Asia respond countless algorithms billions in foreign exchange hedge funds be put in motion.

Funds ' broke through all kinds of stop loss borders succession. One fell on the other way, 'Adrigem outlines the panic.

'Hurricane sterling' than as a concept born in the currency market that is already crazy about abbreviations like 'aussi', 'swissie' and 'cable' (dollar-pounds).

' Hedge funds do this more often. If they are in an illiquid market like Australia overnight, inserting extremely large transactions, can cause extreme reactions of which they benefit, 'says Rob Adrigem currency mediator Ebury.

Adrigem saw for the first time in many years ' everyone totally shocked lover leaned back: what now, 'he says?.

'A British massacre', see Friday currency trader Laurens Maartens (NBWM) early on Damrak taking place before his eyes. ' Hedge funds see how far they can push the bottom of the pond, 'thinks trader Jeremy Cook of World First.

Unlike the equity market knows much larger currency no circuit breakers, which directly limit damages in huge outliers. The pound still recovering Friday, and is approximately 2% loss towards the end of the Amsterdam stock market trading, possible intervention by the Bank of England.

For London this dip is no ordinary fat finger, manual keys miss a trader with a major impact. The Bank of England early Friday direct research at the Bank of International Settlements.

Chris Turner, head of currency strategy at ING Group, was skeptical about the Brexit-impact on the pound. Friday he puts overlooking possible Brexit tough negotiations with the EU anticipated floor price for the pound against the euro lower again.

In a week's time, moreover, was 4% risk premium on sterling transactions. In addition, next week possibly 2 to 3% premium on top, says Turner.

The valuatahandel has a lot of speculation and is not quite right with the British economy, where the low pound provisionally would be a boon for British exports. Currency Trader Cook of World First is skeptical about the long term growth.

' There is no conceivable meaningful reason to buy British pounds. Or even to hold pounds, 'Cook said in London. ' There is market panic all the way.'

The British pound had earlier weakening of the pound in 1992 and 2008. ' But, in both cases did not lead to a robust growth. The low pound makes for a fall in investments in large companies. That has had an impact on employment. '

Currency Mediator Ebury has its customers, mostly large SMEs, advised that when they have to make payments in pounds, to carry out immediately. The price is favorable.

And the advice is to hedge contracts in pounds for the coming months, to hedge against further losses in value against the thirty main trading currency.

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