- Just after midnight in the UK on Friday morning, when most of Europe was asleep, foreign exchange dealers in Asia were jolted out of their routine contemplation of the currency markets by a sudden, inexplicable plunge in the value of the pound against the dollar.
The UK currency had been under renewed pressure since Sunday, when Theresa May said she would trigger article 50 by next March and hinted at a hard Brexit – putting immigration controls at the forefront of EU discussions at the expense of remaining in the single market. With investors worried about the subsequent outlook for the UK economy, the pound had already dropped to a new 31-year low.
Forex is the market. It's the biggest market in the world. https://en.m.wikipedia.org/wiki/Foreign_exchange_market The value of a currency is based mostly on its utility in trade, the stability of the state backing it, the supply of it, the collective belief that it has value, and speculation that any of these will change. Ultimately, it is a social agreement about specific numbers and paper.