By John Smith • 07 October 2016 • 13:02
Asian currency trader.
THE problem with computers and computer programmes is that they do what they are told and it is thought that a massive crash in the value of the pound in the overnight Asian market which saw the pound dropping by six per cent against the dollar leaving it at $1.184, the biggest drop since the Brexit vote, was caused by an automatic sale.
No-one appears to know the exact reason for the sudden sale of sterling during quiet, evening trading on October 7 and it did recover to see a loss of just two per cent as trading was taken up by humans but it is thought that a programme reacted badly to a piece of news, which may have been a Financial Times article which suggested that France was going to be tough in the Brexit negotiations but this sort of volatility is bad for the currency and is even prompting a Bank of England review.
Different parties have opposing views on the situation with sterling remaining weak as it does help exports but hinders imports and with the euro following on the coat tails of the dollar, those expats living in Spain but receiving sterling pensions or having investments in the UK are seeing their income reducing as the pound now stands at a fraction over €1.10 on October 7 (although to purchase euros you will be lucky to get €1.08 less a commission charge).
Tourism to the whole of the Eurozone could well be hit as this is likely to be a long term rather than short term malaise and UK airlines are going to see their aviation costs continue to shoot up unless they have large dollar incomes from fares.
The outlook is likely to remain poor for some time with analysts forecasting an even greater drop in the value of the pound as the date of Brexit draws nearer, so those who have to buy their euros and dollars with sterling will have to hope that there is a major financial catastrophe in the USA or the Eurozone, otherwise this one off unexplained drop could become a regular occurrence.
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Married to Ophelia in Gibraltar in 1978, John has spent much of his life travelling on security print and minting business and visited every continent except Antarctica.
Having retired several years ago, the couple moved to their house in Estepona and John became a regular news writer for the EWN Media Group taking particular interest in Finance, Gibraltar and Costa del Sol Social Scene.
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Typical.. Who helped France during WW1 and WW2 is this the way we are repaid.. Makes you think doesn’t it
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