The UK pound rose as much as 1.5 percent against the dollar within seconds on Tuesday, as a gauge of expected volatility surged before the U.K. votes in just over two weeks on whether to remain in the European Union.
Expectations for swings in sterling over the coming month climbed to a fresh seven-year high before the June 23 referendum. Investors and analysts were left bemused after the sudden move, with some speculating that a mistyped transaction had triggered automatic orders to sell or buy currencies to avoid losses.
“Could be stops going off in thin liquidity,” Joseph Capurso, a senior currency strategist in Sydney at Commonwealth Bank of Australia, said by instant message. “Can’t imagine GBP is liquid in Asian trading hours.”
The pound was 0.5 percent stronger at $1.4517 as of 6:32 a.m. in London after appreciating to $1.4660. The short-lived 1.5 percent gain was its biggest intraday advance since March 17.
The pound has been a gauge of sentiment throughout the referendum debate. It slid to a seven-year low of $1.3836 in February, and remains the worst performing developed-market currency this year.
“There was no obvious catalyst for the move and it looks stop-driven,” Sue Trinh, a Hong Kong-based foreign-exchange strategy at Royal Bank of Canada, wrote in a note to clients.
