THE pound suffered a "flash crash" – it's biggest drop since Brexit – with confused traders left scrambling to pinpoint the reason behind the sudden sell off.
Sterling suddenly dropped – hitting its lowest level since mid-1985 – before bouncing back, with the sudden dip coming as UK business confidence rebounded to levels not seen since the July vote to leave the European Union.
The pound hit a low in the early Asian trade, hitting $1.1841 before immediately rebounding to around $1.2450, also falling almost 10 per cent to US$1.1378 – before recovering to $1.2415.
The pound has experienced a number of highs and lows this week after British Prime Minister Theresa May revealed she would trigger Article 50 by March next year, with Britain to leave the EU by 2019.
Naeem Aslam, chief market analyst of Think Markets said: "What we had was insane — call it a flash crash — but the move of this magnitude really tells you how low the currency can really go."
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But others blamed human error for the crash, with IG Markets' analyst Angus Nicholson saying "it looks like it was an algorithm-driven flash crash", saying: "given low volumes in the Asian session, it would have forced other algorithms to join in and magnify the fall".
But despite the short-lived drop, businesses confidence has been revealed to have jumped to levels not seen since before the Brexit vote, a new survey has revealed.
The latest UK Economic Index run by YouGov and the Centre for Economics and Business Research (CEBR) showed that business confidence rose to 112.4 last month, after dropping to 105.0 in July and 109.7 in August.
Numbers above 100 indicate positive business outlook.
The survey, which polled more than 500 business leaders between September 15 to 23, also showed that 44% of businesses were now optimistic about the UK's economic prospects over the next 12 months, compared with 35% in August.
Scott Corfe, a director at the CEBR, said: "The panic that gripped businesses in the aftermath of the referendum has subsided and they are now much more level-headed and optimistic about the future of both their own organisations and the UK's economy in general."
The figures echo positive data in the latest Markit/CIPS services purchasing managers' index (PMI) released on Wednesday, which showed a better-than-expected performance in September, providing further evidence that the sector was recovering from a shock contraction after the Brexit vote.
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