The Bank of England is looking into the causes of a 6% fall in the value of sterling overnight Thursday, said a spokesman for the central bank.
The U.K. currency fell in Asian trading hours to a low of around $1.18, having opened around $1.26. However, sterling recovered throughout the day Friday, moving back up to around $1.24.
The FTSE 100 index, however, gained 0.63% over the day.
The moves highlight increased risk in developed markets, said Julian Mayo, co-chief investment officer at Charlemagne Capital, in a news release. “One lesson of the developing fiasco surrounding Brexit is that emerging markets no longer have a monopoly on political risk. Sterling is behaving like an emerging currency,” Mr. Mayo said. “With the U.S. election next month and polls in both Germany and France next year, developed market risk seems likely to remain elevated for some time.”