It was an especially thinly traded early Monday in Asia today with a public holiday in New Zealand. Very early trade in GBP/USD took the pair to lows around 1.0765, carrying on its cratering during Friday’s trade. The early slump was soon recovered, GBP/USD ticked back to just under 1.0850 as liquidity improved a little.

The bounce back was short-lived though. Cable turned back lower to under 1.0800 again. Trade was relatively orderly but with sellers prevailing until it fell under about 1.0750 when the bids were getting hit more heavily. Selling accelerated as it dropped faster, hitting lows under 1.0390 before bouncing a little. You’ll see some ‘fat finger’ and ‘flash crash’ explanations. These are on the wrong track. While the move was extremely wild and fast the selling was begun in response to fundamentals (the fiscally irresponsible budget announcement led to a massive offloading of UK Gilts and also the currency on Friday and that carried on here during the session) and was exacerbated by ‘just get me out’ selling. It remains to be seen if this is a capitulation move for GBP. Its hit its lowest ever.

More widely, it was a session of USD strength. Major FX broadly fell against the USD. Much of that USD move has been retraced though.

USD/JPY has maintained its bid tone though. As I update its just under 144.00. Bank of Japan Governor Kuroda is scheduled to speak soon (0530 GMT).

gbp wrap 26 September 2022