07 October 2016 by lberuti
When European investors arrived in the office this morning, news of the British Pound flash crash was all over their screen. As the session wore on though, the move against other major currencies persisted, showing it might be more than just computers racing against each other to drive down the price of the UK currency. Mrs May signalled that a crackdown on immigration took precedence over membership of the Eurozone market. This was met with a hardening of European leaders’ position, and it dawned on traders that the UK economy could be harder hit than they previously thought. These concerns translated into new lows for the pound, but they also affected UK retailers. Their share price were marked down and their 5 year risk premia were pushed wider, making them the worst performing group during today’s session.
Meanwhile, the broader credit market, which initially showed signs of weakness, closed almost unchanged across the board. Credit indices are finding it very difficult to sustain any protracted widening at the moment.