Brexit negotiation to weigh on the pound?

The British currency suffered a massive temporary loss in value overnight, diving 10% against the dollar in just minutes – a so-called flash crash. It fell from around $1.26 to near $1.14 in trading in Asia before recovering somewhat by the time Europe woke up, it was the most aggressive move since the results of the Brexit vote emerged in June.

With traders struggling to find whether it was a "fat finger error" or related to fears over Brexit, the Bank of England said in a statement: “We are looking at the causes of the sharp falls over night".

The governing Conservative Party in the U.K. held a conference in Birmingham this week, where PM Theresa May indicated she is veering toward a so-called hard Brexit. And she underlined she would trigger Article 50 by the end of March next year to officially kick off exit negotiations with Brussels.

In an interview with Reuters in the afternoon, Eurogroup President Jeroen Dijsselbloem said the pound drop reflects investor disappointment in British government policy; for Brussels if the message from Britain remains a "hard Brexit", the pound is is likely to weaken further.