About That Historic Collapse In Sterling: It Was "Only" The 9th Biggest Drop Going Back To 1862

Over the past several days, the financial media has been preoccupied with the fascinating - and historic - drop in sterling which as this site also noted, was the biggest in history. As it turns out, that is not the case, as the data was limited by the available records on file with major service providers such as Bloomberg and Reuters. However, if one goes back in time, as DB's Jim Reid has done, it appears that Friday's sterling move was rather puny by true historical comparisons.

As Reid writes, "I'm sure you've read by now that Sterling's drop on Friday (-7.64% based on GFD data) was the largest on record against the dollar. Think again. Although it's the biggest drop since the collapse of the Bretton Woods system in the early 1970s there have been 8 bigger daily down moves since 1862.

The bigger moves (with brief reasons for those within the last century) are 1) 19 Sep 1949: (-30.41%) Pound devalued under Bretton Woods due to economic concerns; 2) 21 Sep 1931: (-23.57%) Gold Standard abandoned in the Depression; 3) 30 Sep 1869: (-18.75%); 4) 20 Nov 1967: (-13.02%) Harold Wilson's famous 'pound in your pocket' devaluation to battle the UK's economic problems; 5) 25 Mar 1863: (-10.90%); 6) 10 May 1940: (-9.79%) War related deviation from the dollar peg; 7) 25 Sep 1931: (-7.89%) A few days after the Gold Standard was abandoned, the pound continued to depreciate although it did jump by 7.14% next day. 8) 19 June 1866: (-7.76%).

So in the >38,000 business days since 1862, Friday was only the 9th worse day for Sterling. So maybe it's not all that bad...