© kasto, Adobe Stock
The British Pound was the day's best performer through much of the morning's London trading session, until it suddenly took a plunge.
The sudden dip in the GBP was felt across the board with the Pound-to-Dollar exchange rate suddenly shedding 60 pips in ten seconds.
The Pound-to-Euro exchange rate followed suit:
The falls come at a time of apparently positive sentiment towards Sterling owing to an apparent break out of unity in the UK Government over Brexit strategy, the sudden drop which left traders and commentators scratching their heads:
"GBPUSD just dropped about 60 pips - not sure what caused this but it is bouncing back now. A fat finger, perhaps?" reflect Forex.com.
"Own up; who just monstered GBP?" asks Jeremy Cook, analyst with foreign exchange brokers World First.
However, by early afternoon - when I write this update - the currency has recovered its losses nicely, so it's a bit of a rollercoaster today.
"Cable has been choppy through London trading, dipping around 65 pips in a minute in the past hour on talk of a large flow, and then recovering," says Shaun Osborne, an analyst with Scotiabank, "we think the domestic political backdrop remains a fairly significant risk for the pound in the coming weeks."
"I Wouldn't read too much into GBP moves today (it's all a bit erratic).... but if there's anyone on the Cabinet - apart from the PM - that investors should focus on it's probably the Chancellor given that he's calling for an economically rational Brexit (i.e., does the least damage)," says Viraj Patel, analyst with ING Bank N.V. in London.
We note there are a large amount of options expiring today, with £370M at 1.39 GBP/USD and £650M at 1.4050 which could well explain any mysterious moves into the 15:00 expiry. On Monday there is about £1.2.2BN worth of GBP/USD due for expiry.
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