From the FXWW Chatroom: Central bank officials looking into the factors behind the dramatic fall GBP took on October 7 will make an initial report to the BIS in early November, sources with knowledge of the investigation said, reports Reuters.
It is two weeks since the GBP crashed and rebounded by about 10% in a few minutes at the start of Asian trading, an unprecedented shift for a major currency at a point when the USD5tn -a-day market is at its lowest ebb.
The moves triggered another round of the hefty losses the pound has suffered since June’s Brexit vote, and some sales of UK assets by investors worried over the stability of the currency and its impact on inflation.
Bank of England Governor Mark Carney, who also heads the BIS committee, asked the Swiss-based central banks’ central bank to investigate.
“BIS is still in the information-gathering phase but they have a pretty good idea of what happened. The (currency trading) platforms have generally been very helpful with providing data,” one source familiar with the first stage of the investigation said on Thursday.
“It will probably be another 2 or 3 weeks before they are ready to draw conclusions but I am sure they will report to the Markets Committee when it meets in early November.” Market participants generally agree the sell-off was at least worsened by the algorithmic machine trading that makes up much of the global currency market, while some speculate the initial move may have come from electronic news gathering software or other parameters used in trading programmes.
BIS declined to comment on the progress of the investigation and does not publish dates of its committee meetings.
But a second source with knowledge of its workings confirmed the markets committee would meet in Geneva at the start of next month.
The Bank of England also declined to comment.
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