10th October 2016
The pound had a bad week. It began by falling to its weakest level versus the euro since 2011 and a 31 year low versus the US dollar of around $1.27, before becoming the latest victim of a flash crash, falling to $1.1752.
Then in a chaotic two minutes of trading in Asia on Friday morning (just after midnight for us), the pound suddenly fell nearly 7%.
Whilst the catalyst isn’t actually known and could simply have a been a trader’s “fat finger” (i.e. a misplaced keystroke) or computer initiated algorithmic trading, it coincided with comments from Francois Hollande, the French President, that EU officials should take a tough negotiating stance with the UK – implying that both sides were currently accepting of a hard Brexit.
While the drop was short-lived (the pound quickly recovered most of the flash crash losses during the following hour), it still ended the week 3.93% lower at $1.246.
As a result of the weaker pound and a firmer oil price (which rose to $50.33 a barrel) helped to make the FTSE-100 one of the best performing equity markets over the week, rising 2.10% to 7,044.39.
Ian Copelin, Investment Management Expert*
*Ian Copelin is an Investment Director at Wealth at Work Limited which is a member of the Wealth at Work group of companies
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