Cable’s “Flash Jump”

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As New York was getting ready to open today into a relatively quiet Monday’s market, the GBP / USD currency pair, one of the world’s major Forex currency pairs, rose by almost 100 pips in value in a matter of seconds. That equates to about 0.80%.

This very sharp and sudden rise was not triggered by any obvious news event or public piece of information.

By the standards of a “flash crash”, the movement was relatively small. Whether it was a true “flash crash” remains to be seen. It is worth noting that the last flash crash was also in this same currency pair and occurred only last month.

Some will see this as a sign that despite its enormous volume, the growth of high-frequency trading and black box algorithms within the Forex markets may be making the market more unstable and prone to sudden inexplicable movements in price.

British Pound

Adam is a Forex trader who has worked within financial markets for over 12 years, including 6 years with Merrill Lynch. He is certified in Fund Management and Investment Management by the U.K. Chartered Institute for Securities & Investment.