No products in the cart.
- Latest
- Trending
ADVERTISEMENT
On September 16, 1992, the British pound fell to an all-time low. Since then, the day has become known as “Black Wednesday,” or the day George Soros defeated the Bank of England.
The historically stable currency lost 4.8% of its value against the US dollar, effectively locking the UK out of the EU’s newly formed European Exchange Rates Mechanism (ERM). The country joined her ERM to help integrate the European economy, but effectively failed to comply with the terms of the ERM.
The UK’s failure to keep the pound stable has opened the door for speculators to short the currency. Investor and fund his manager George Soros was able to amass one of his biggest short positions in the pound and take home $1 billion.
On September 26, 2022, the British pound experienced a flash crash of roughly the same magnitude as Black Wednesday, losing 4.3% of its value against the US dollar.
One of the main culprits behind this crash could be large traders. A significant options barrier of 1.07 for him against the dollar caused a cascade and the pound dropped to 1.06, 1.05 and 1.04 in a matter of hours.current pound stand It exceeded parity with the US dollar by just 7 cents.
Since the beginning of the year, the pound has fallen more than 21% against the US dollar and more than 8% against the euro.
The pound’s woes may seem recent, but the currency has been steadily depreciating for the better part of the past eight centuries.
As the pound plummeted to a 30-year low, people flocked to real assets to avoid big losses. BTC/GBP trading volume surged over 1,200% on Sept. 26 as British pound holders began actively buying bitcoin. This contrasts with the BTC/USD pair, which saw relatively flat trading volumes on centralized exchanges throughout the summer.
The rapidly declining pound poses a major threat to the UK sovereign debt market A potential systemic risk to the country’s financial stability has prompted the Bank of England to emergency action Intervene in bond markets. On September 28th, the Bank of England announced it would suspend its gold coin selling program and start buying long-term government bonds.
Newly imposed by British Prime Minister Kwasi Kwarten Tax cuts and borrowing plans The pound fell further, leading to a sharp decline in British government bonds. To protect their assets from the risks associated with inflation and rising interest rates, most pension funds invest heavily in long-term government bonds. The Bank of England’s emergency measures are an attempt to help thousands of pension funds suffering from cash shortages. dangerous of not meeting the margin call.
This is a stark reminder that the world of traditional finance can be as unpredictable as crypto markets. It could become the new reality for traditional fiat currencies and commodities.
