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GBPUSD Flash Crash and Short History of Sterling

Posted on Oct 7th, 2016

by colibritrader

GBPUSD Flash Crash and Short History of Sterling

by: Colibri Trader

The GBPUSD flash crashed in a low-liquidity unprecedented move. It has been an unexpected event even for the price action traders. Although the pair broke the support level and a move lower could have been expected, the magnitude of the event was stronger than anticipated. What makes the fall even more mysterious is that there were no news related with the fall. There are a few potential explanations (like a fat finger trade or a low liquidity asian-open initiated fall) but nothing concrete.

Other times that the pound have moved such an insane amount of pips have been during the BREXIT.

The following graph taken from Bloomberg summaries the previous times that the pound tumbled more than 25% for a period of 6 months or so.

Source: Bloomberg.com

You can see that the pound tumbled in 1981, 1992, 2008 and again in 2016. Have a look at the infographic that I have created below that shortly explains the history of the pound…

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