The FT's Jennifer Hughes explains what happened.

The pound plunged and there is really no other word for the 6 per cent fall in the major currency in 2 minutes flat.

It went from trading at about $1.26 to $1.18 just at 7 p.m. in New York.

As 9 a.m. in Tokyo and 10 a.m. in Sydney, it soon bounds back to $1.24.

But moves that sudden are extremely rare.

Why?

Traders suggests it may've been a mistaken fat finger trade where someone keyed in the wrong price,

Or a rogue computer algorithm effect to be doing the same thing.

The backdrop is that this happened at the weakest point in the FX trading day.

New York has gone home and Asia is really only just getting up to speed.

What next?

We are speculating about what cause this and a new debate on the pound's value.

Now it really did bounce back quickly to the $1.23, $1.24 level,

but it hasn't recovered all that ground it lost,

suggesting traders are happy enough thinking that the Sterling will keep weakening.

It perhaps not quite as dramatically as this plunge.