The pound fell 6pc in the space of just a couple of minutes last night before recovering most of its losses in what market participants are already dubbing a sterling "flash crash". The currency fell from $1.26 to a low of $1.1819 before creeping back up to $1.24 over the next half hour. What happened?
No one yet knows for sure. And the post mortems on past flash crashes have often dragged on for months. It may, therefore, be some time until we get the full picture.
The most likely explanation was that it was a confluence of factors.
1. Currencies trade around the clock. However, market participants have pointed out that the flash crash occurred at a particular point in the date - very late in the trading day (on Thursday) for the US and very early during in the trading day (on Friday) in Asia.
It is in these periods of lull that unusual price movements can have a particularly large impact.
If someone speaks in a loud room, then no one notices; if someone shouts when it's quiet, everyone jumps.
2. This factor is likely to have been accentuated by a subdued trading ahead of big economic news - the US jobs report - which will not be released until this afternoon (UK time). That said, Friday can be a twitchy day in the currency markets because it is when certain derivatives expire and need to be hedged.
3. In the old days, the immediate culprit for this kind of sharp market movement would be a "fat finger" error, with some hapless trader's doughy digits accidentally punching too many zeros into a buy or sell order.
Nowadays, the default culprit is a "dodgy algo", with the assumption that a trading algorithm has come across something that doesn't compute, causing it to misfire.
This is what happened with the famous US stock market flash crash in 2010 and the strange spike in US Treasuries in 2014.
This can have a cascade effect in the market as other algos spot the large price movement and automatically trigger orders or "stop out".
Stop loss orders sell a security at a predetermined level.
The trouble is that lots of them being executed at once can but further downward pressure on the price and hence trigger even more stop loss orders. And so on, and so on.
4. A general lack of liquidity in the market. Bank of America Merrill Lynch recently released a report in which it said that thin "bid-ask spreads", which would usually indicate plenty of liquidity in the market allowing traders to execute even large trades without affecting the price of the relevant securities, masked a deeper underlying
problem.
5. And, of course everyone is a little on edge because of Brexit.
The speech by UK Prime Minister Theresa May earlier this week has been interpreted as meaning a "hard" Brexit is increasingly likely.
Even discounting the flash crash, the pound is down around 6pc since Monday and is on course for its worst week since the one after the referendum result when sterling fell around 11pc.
The Financial Times has pointed out that its story on remarks made by Francois Hollande, in which the French President warned that allowing the UK to get a good deal from Brexit negotiations might embolden anti-European Union factions, was published at almost exactly the same time that the pound started to plunge.
6. There is a possibility that someone tried to take advantage of the above factors to try to move the market and make a huge profit as sterling's price fell.
It's unlikely it was deliberate. But not impossible.