The ‘flash crash’ was specifically linked to news of Brexit comments made by the French President Francois Hollande.
Adam Cole at RBC Capital Markets told poundsterlinglive that the drop was “Ostensibly triggered by harsh comments on UK exit terms from French PM Hollande”.
Kathleen Brooks at City Index said: “Apparently it was a rogue algorithm that triggered the sell off after it picked up comments made by the French President Francois Hollande, who said if Theresa May and co. want hard Brexit, they will get hard Brexit.
“These days some algos trade on the back of news sites, and even what is trending on social media sites such as Twitter, so a deluge of negative Brexit headlines could have led to an algo taking that as a major sell signal for GBP.
“Once the pound started moving lower then more technical algos could have followed suit, compounding the short, sharp, selling pressure.
“Thus, the pound has been the victim of the digital, headline-driven world that we live in today. For sterling, algorithms have become the modern-day version of a George Soros.”
Article source: http://www.huffingtonpost.co.uk/2016/10/07/pound-to-euro-exchange-rate-flash-crash_n_12383508.html?utm_hp_ref=uk-politics&ir=UK+Politics