Image source, Bloomberg/Daiwa Capital Markets

Daiwa Capital Markets has this to say about the pound's flash crash, external:

"Even before last night’s “flash crash”, which saw it reportedly trade as low as $1.14, sterling was having a torrid week. And while it is currently 10 cents or so above where it traded at the lows overnight, at below $1.24 it is still down 4.5% since last Friday’s close, making it the worst-performing of all currencies in the world over the past week. And, even over a longer time period, sterling now sits among a sorry band of currencies in terms of performance - since the start of the year only the currencies of Angola, Sierra Leone, Nigeria, Venezuela, Mozambique and Suriname have fallen by more." 

Image source, Getty Images

Can any of you sharp-eyed readers spot what time Sports Direct issued its profit warning?

Image source, Getty Images

If we were being unkind, we'd say Friday afternoon was a good time to try to bury bad news.

Sports Direct has released a profit warning, external after the pound's flash crash last night.

In September, the firm said it expected full year underlying earnings of around £300m.

But it now expects an impact of £15m after last night's sterling fluctuations, plus, if the pound dollar exchange rate stays around $1.20, the firm will take a further £20m hit.

Chancellor Philip Hammond has told BBC economics editor Kamal Ahmed that there will be "a period of turbulence" for sterling due to Brexit.

"This will be a period of turbulence. I expect that we will feel turbulence. There will be ups and downs," Mr Hammond said.

He said that although the sterling drop overnight had a "technical component" he said that more generally the market had finally understood that Britain was leaving the European Union.

There had to be a "resetting of expectations" and now the "final foot had dropped".

He added there would regularly be "noises off" from European Union leaders about the state of the negotiations.

Image source, Reuters

Antonio Horta-Osorio, chief executive of Lloyds Banking Group said: “Lloyds Banking Group welcomes the Government’s decision to resume the trading plan to return the bank to full private ownership.

"This reflects the hard work undertaken over the last five years to transform the group into a simple, low-risk and customer-focused bank that is committed to helping Britain prosper”.

Kamal Ahmed
Economics editor

Image source, Getty Images

The government has abandoned plans to launch a major retail share offer of the 9% of Lloyds Bank it still owns.

The Chancellor of the Exchequer said that market volatility meant that it was not sensible to attempt to sell the multi-billion pound stake it still owns to members of the public.

The shares will now be sold via a "trading plan" - small tranches of shares sold to professional investment organisations and pension funds.

Philip Hammond said that the private sale will ensure that the tax payer recovered the "full investment" it made when it bailed out the bank during the financial crisis.

He said that £17bn of the £20bn invested by the government had already been sold back to the market.

"We need to recover the tax payers' money," Mr Hammond said, saying that he wanted Lloyds to be fully back in the private sector.

"The proceeds of the Lloyds bank sale - the priority is to turn those assets into cash and use those to reduce debt," Mr Hammond said.

He said that the sale of the government's stake in the Royal Bank of Scotland was "not practical at the moment" whilst the bank was under the threat of fines from the Department of Justice in America and was struggling to sell its Williams and Glyn branch network.    

Simon Gompertz
Personal Finance Correspondent

Image source, Reuters

Analysts had forecast that 171,000 jobs would be created in the US in September, and were also mildly surprised to see the unemployment rate edge up to 5%.

James Athey of Aberdeen Asset Management said the jobs report would be seen as "a minor disappointment". 

It's quite likely traders will lower the odds on a December interest rate rise, as history has shown that Fed chairwoman Janet Yellen is "very sensitive to downside shocks", he said. 

"In reality though attention is far more focussed on what might happen come November 8th," he added.

The US added 156,000 more jobs - not including farm work - last month, according to the US Bureau of Labor Statistics. 

The jobless rate was "little changed" at 5%, it said. Analysts had been expecting a slightly higher number of jobs to have been added.

Image source, Reuters

The European Union has set provisional import duties, external on two types of Chinese-produced steel to counter what it says are unfairly low prices.

The tariffs are the latest in a line of trade defences after EU steel producers struggled to compete with cheap steel which they claimed was sold by Chinese factories at a loss.

Beijing is likely to be riled by the move, which will be imposed on hot-rolled and heavy-plate steel from China for the next six months.

Image source, AFP

Building British trade outside the EU is a priority for Theresa May's government - and becomes even more important if it pursues a "hard Brexit" and leaves the single market. 

But could the UK take over existing trade agreements the EU has with other countries, under "grandfather rights", the phrase for allowing old rules to continue to apply amidst new arrangements?

The short answer is it might be able to do just that, according to Andrew Walker, BBC World Service economics correspondent.

Read more of his article 'Can the UK take over existing EU trade agreements?' here.

Kenneth Rogoff, a Harvard professor and former US Federal Reserve board member, says the fall in sterling is "more like a country crisis as opposed to a currency crisis".

He's told American business channel CNBC that it's a reflection on British investment and the British economy. 

"Everyday moves are pretty hard to explain but I think people are concerned about their assets in the UK, maybe they're wrong," he said. "But it [withdrawing from EU] has never been done before and people are nervous."

Image source, Getty Images

Connor Campbell at Spreadex makes the point that it's been a tough morning for the pound, even without the flash crash. He puts it down to two main reasons:

"Firstly, both the manufacturing and industrial production readings came in below expectations at 0.2% and -0.4% respectively, somewhat contradicting the positive PMIs from earlier in the week. 

"Secondly, and perhaps most damningly, HSBC issued a pretty bleak statement claiming that, as the ‘defacto official opposition to the government’s [Brexit] policies’, the pound could well find itself circling $1.10 by the end of [next] year."

The pound is back above $1.23. In the chart you can see it was on a steady decline yesterday (the left hand side), but has gyrated in trading today. 

Flash crash aside, it's still down more than 2% today against the dollar - a big fall in and of itself.

Against the euro, it's hovering around the €1.11 mark after a drop of more than two cents.

Away from the markets for a moment - the world's first aviation pollution agreement has been approved. After years of negotiations and disagreements, the United Nations agency that oversees the industry gave the pact the go-ahead. 

The International Civil Aviation Organisation's global carbon offsetting system is expected to freeze the growth of emissions from commercial flights. 

It comes days after the UN confirmed the separate Paris Agreement on climate change had received support from enough countries and would come into force next month.

One reason for the pound's "flash crash" was that it took place in the quiet hours between Wall Street closing and Asian stock markets opening, when there are far fewer traders around. 

Business presenter Victoria Fritz tweets:

Image source, ETX

The FTSE 100 is heading back towards all-time highs in morning trade. The index of the UK's biggest stocks is up nearly 1% to 7,060 points.

Following the pound's heavy falls, it's miners and other big international firms with large overseas sales who are on top. 

"The British pound’s flash crash has shaped the winners and losers on the FTSE 100," says Jasper Lawler of CMC Markets (who also inspired this post's headline).    

On the back of Easyjet’s profit downgrade yesterday, airlines are among the worst hit as traders pull out of firms hit by a weaker pound, he adds. 

Image source, Reuters

HSBC says it expects the pound to drop to $1.10 and parity against the euro by the end of next year as traders increasingly believe the government will pursue a "hard" Brexit.

"Brexit, whether one likes it or not, is a political decision, one we have to respect," said David Bloom, the bank's global head of FX research. "The currency is now the de facto official opposition to the government's policies."

He goes on to say: "It is becoming clear that many European countries will come to the negotiation table looking for political damage limitation rather than economic damage limitation. A lose-lose situation is the inevitable outcome."

The bank expects the currency to drop to $1.20 by the end of this year from around $1.24 on Friday. 

"The pound used to be a relatively simple currency that used to trade on cyclical events and data, but now it has become a political and structural currency. This is a recipe for weakness," Mr Bloom added.  

Image source, PA

Amid all the numbers, charts and analyst warnings, it's easy to lose sight of what the falling pound might mean for people. 

Economists think it'll be bad news for British holidaymakers going abroad, those who have mortgages on foreign homes, and, if it leads to inflation, shoppers. 

Among the winners should be big UK exporters, tourists coming to the UK, and people renting out British holiday homes.    

Read more: Who is affected by the falling pound?