GBP EUR Exchange Rate At Historic Lows after Flash Crash

Modified: Friday, 7 October 2016 12:05 BST - Written by James Fuller

STORY LINK GBP EUR Exchange Rate At Historic Lows after Flash Crash

The GBP EUR exchange rate plummeted over the span of just a couple minutes last night as the Pound (GBP) was hit by a flash crash in Asian trading. There is still uncertainty over what actually caused the crash by it is believed to have been due to an automated trading error or by a ‘fat finger’ trade in which a trader may have entered a wrong number.

Flash Crash adds to the Pound Sterling (GBP) ‘Brexit’ Woes

Sterling hit a new five-year low against the Euro (EUR) in the wake of the flash crash which has caused a major setback for the beleaguered Pound as it struggles under negative market sentiment over ‘Brexit’.

Shockingly the Pound fell even further against the Euro later on in the morning after mounting a recovery shortly after the flash crash. With it now appearing that Sterling will end the week’s session drastically lower than expected.

This has exacerbated the Pounds lows following the announcement last weekend from Prime Minister Theresa May saying that she would invoke Article 50 of the Lisbon Treaty before the end of March 2017 which saw Sterling plunge as traders flee the UK currency in droves.

One of the major concerns for investors is that the UK government is barrelling towards a ‘hard Brexit’ in which the UK will gain stronger immigration controls but will give up its access to the single market in exchange. Markets worry that UK businesses will struggle and investment will fall without free access to the European market.

GBP EUR Exchange Rate to Reach Parity?

HSBC has said today that it forecasts that the Pound will reach parity with the Euro buy the end of 2017, something that is sure send shockwaves across the markets.


David Bloom, HSBC’s global head of FX also said that ‘the currency is now the de facto official opposition to the government’s policies’ as he spoke with the Financial Times, he continued that;

The Pound used to be a relatively simple currency that used to trade on cyclical events and data, but now it has become a political and structural currency. This is a recipe for weakness given its twin deficits.

This appears to reflect market trends this week as despite a slew of positive domestic data coming out of the UK, the Pound was unable to make any gains against the Euro, with the GBP EUR exchange rate continuing to spiral downwards due to ‘Brexit’ sentiment.

Next week provides little hope for taking the spotlight off of ‘Brexit’ as well, with a severe lack of data releases and only one of any significance, the Pound will likely be in for another turbulent week even without another flash crash.

Current GBP EUR Exchange Rates

At the time of writing the GBP/EUR exchange rate was trending around 1.10 and the EUR/GBP exchange rate was trending around 0.90.

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