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U.K. pound plunges 6% in mystery flash crash

We haven't seen this number since 1985

The British pound suffered a jarring flash crash on Friday, nosediving more than 6% against the dollar in a matter of minutes.

The sudden plunge in early trading in Asia left investors stunned and analysts struggling to explain what could have caused such an unusual move.

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“It was just another quiet day in Asia, and then, Bang! All the lights went red,” said Matt Simpson, senior market analyst at ThinkMarkets.

The pound had already sunk to a fresh 31-year low of around $1.26 on Thursday on deepening concerns that the U.K.’s split from the European Union will hurt the country’s economy. Strategists had widely forecast it would go lower, but not as rapidly as it did on Friday.

The flash crash yanked the pound down to near $1.18. It recovered most of the losses soon afterward to trade around $1.24.

Why the U.K. pound is still crashing

“You’re seeing six months of forecasts in less than six minutes,” Simpson said. Earlier this week, he had forecast the pound would drop to $1.20 by April.

There was no obvious trigger for the extreme drop. Experts speculated that it could have been caused by computer trading programs, human error or a big market player making a very large move.

“We don’t really have any clear answers,” said Simpson, who’s based in Singapore.

The pound has taken a beating this week after British Prime Minister Theresa May said Sunday that the U.K. would begin the formal process of leaving the EU by the end of March. The exit will happen two years later, and the U.K. will give priority to controlling immigration.

Related: $1.3 trillion at stake in Brexit breakup

European leaders have made clear that if Britain does not allow free movement of EU citizens across its borders, it will lose some of its rights to access the free trade area.

So investors are fretting again about two key issues: British exporters may find it harder to compete in Europe, and the country’s banks could lose the ability to do business freely across the region.

The U.K. economy has proved more resilient than expected in the wake of the vote to leave the EU, with the sharp fall in the value of the pound and a big injection of money from the Bank of England helping limit the fallout. But some analysts are predicting that the pain is far from over.

The pound is now down about 17% since Britain voted to leave the EU.

— Charles Riley and Alanna Petroff contributed to this report.

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