“The knee-jerk reaction was quite violent across all markets and the usual safe-haven trades were being put on,” said one currency strategist. “The market is now backing off a little and questioning the magnitude of the implications.”Read More: Sterling hits 18-month low against dollar
British Pound falls after terrorist attacks
Thursday, July 7, 2005
Forex traders and investors responded to the terrorist attacks which
rocked London today by sending the British Pound to near 18-month lows
against the USD. As soon as the news reached the trading floors of
forex dealers, panic set in, and the Pound quickly lost 1% of its value,
relative to the USD. Experts agree both the attack-and the ensuing
panic in the markets-could have been far worse. One trader spoke of a
“risk premium” which has been built into the currencies of nations that
are potentially susceptible to terrorism, and probably prevented the
Pound from depreciating further. Investors begin to understand the
relatively minor implications of this latest attack, the Pound may well
recover. Forbes reports:
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