Having assured themselves the Remain camp was going to easily win the British EU referendum over the past few trading days, traders bought Sterling and other risk assets aggressively and sold gold and bonds.
The release this morning of the YouGov and IPSOS MORI polls soon after voting closed emboldened more buying as both suggested that the Remain camp would win. This saw traders pile in again buying Sterling, Australian dollars and stock futures.
But the release of the Sunderland regional result which showed a decisive victory for the Leave campaign saw Sterling fall almost 500 points, 3.23%, in less than 15 minutes. This an enormous move.
It is exactly the type of volatility that UBS, ING and many others have been warning their clients about this week. It is also the type of price action that banks had anticipated as possible in the wake of the vote.
Make no mistake: this price action is not normal.
Nor can it be hedged, which makes it even more volatile as banks and traders chase the price. It is certainly not normal for GBPUSD, which is the one of the big three global forex pairs, to trade up to 1.5006 and down to 1.4347 in the space of an hour.
As a result of the big moves in Sterling we’ve also seen a wild ride for the Aussie which having made a high of 0.7641 earlier is now 1 cent lower at 0.7544. Gold fell to $1252 and is back at $1267 an ounce and West Texas crude oil is back below $50 a barrel after closing above that level at the end of trade in New York.
Likewise, US stock futures, which were up sharply earlier, are now down half a per cent.
The rally in the past few days has set up a dangerous asymmetry and a potential crash in markets if the pollsters and the bookies end up getting this wrong.