During two chaotic minutes of Asian trading, the pound plunged the most since the Brexit referendum in June, with traders saying computer-initiated sell orders exacerbated the slump.

The 6.1 percent drop drove sterling to a 31-year low of $1.1841, according to composite prices compiled by Bloomberg of contributions from dealers. Traders speculated the crash might have been sparked by human error, or a so-called “fat finger,” with algorithms adding to selling pressure at a time of day when liquidity is relatively low.

While the currency snapped back in Asia, it resumed its freefall during European hours, as concern welled up that a so-called hard Brexit is on its way, meaning the U.K. will get anything but a sweetheart deal to leave the European Union.

The extent and speed of the drop adds to signs that bouts of extreme volatility are becoming more commonplace in the global currency market as the volume of transactions dwindles and traders using algorithms pick up market share. In January, the South African rand tumbled more than 9 percent in 15 minutes before rebounding, while New Zealand’s dollar had its own flash crash last August.

“This is not something you would expect in a half-efficient market,” said Ulrich Leuchtmann, head of currency strategy at Commerzbank AG in Frankfurt. “We have a liquidity situation which has eroded massively over the last few years and policy makers have largely ignored it. All the regulation that we have in place, for good reason, has the side-effect that liquidity in the FX market is much more shaky and fluctuating heavily, and we have times when it’s extremely low, especially in Asian trading.”

The pound pared part of the massive drop, and was 1.9 percent lower at $1.2377 as of 11:59 a.m. in London, almost matching the decline during Brexit week. It weakened 1.8 percent to 90.02 pence per euro.

“We’ll probably never know why it has actually sold off, if it’s a fat finger, or just algos,” said Ryan Myerberg, a portfolio manager at Janus Capital in London. “There’s no doubt that there’s an electronic component to it.”

At least one electronic-trading platform recorded a transaction at $1.1378, said traders during the Asian day, who asked not to be identified because they’re not allowed to speak publicly.

The Bank of England is “looking into” the causes of the crash, a spokesman said Friday. BOE Deputy Governor Ben Broadbent said earlier this week that the decline so far had been “relatively orderly.”

One-week implied volatility for the pound against the dollar jumped to as high as 16.77 percent, the highest since July 14, from a 10 percent closing level Thursday, according to data compiled by Bloomberg.

“It caught the market wrong-footed and triggered a lot of algorithmic selling,” said Hugh Killen, Westpac Banking Corp.’s head of trading for foreign exchange, fixed income and commodities in Sydney. “We didn’t see any significant demand for sterling off the low.”

Traders also pointed to French President Francois Hollande’s remarks late Thursday that the U.K. will have to “pay the price” for choosing a hard Brexit in its June vote to leave the European Union. Hollande, speaking in Paris at a dinner attended by EU officials, urged the bloc to fight hard on negotiations with Britain. “There has to be a price to pay or else the negotiations won’t go well,” Hollande said.

“Such comments on their own would not be enough to cause a plunge on this scale, but once a move gets going in thin liquidity it can snowball quickly,” said Gareth Berry, a foreign-exchange and rates strategist in Singapore at Macquarie Bank Ltd. While the pound “may recover to the $1.25 area today, all technical support has now been obliterated, so sterling is doomed from here over the months ahead.”

While sterling’s 17 percent drop since the June 23 referendum boosts exports, which helps narrow the country’s current-account deficit, it also increases prices of imported goods for businesses and consumers. The prospect of faster inflation and a loosening of fiscal policy by the government to mitigate the economic risks of Brexit is hurting government bonds. The yield on benchmark 10-year gilts is headed for its biggest weekly increase since August 2015, after climbing on Friday by nine basis points, or 0.09 percentage point, to 0.96 percent.

The outlook for inflation over the next decade, as measured by the 10-year break-even rate — a gauge of expectations of inflation derived from the difference in yield between regular and index-linked bonds — climbed to 3.03 percent Friday. That’s most since January 2014, based on intraday prices.

Other markets remained resilient. S&P 500 Index futures expiring in December slipped 0.3 percent, while a gauge of Asian equities lost 0.2 percent. The FTSE 100 benchmark stocks index for the U.K. was 0.7 percent higher. Exporters have rallied as the weaker pound buoys the outlook for earnings.

“It is possible some opportunistic hedge funds, model-based accounts including algorithmic traders, seized the chance to capitalize on the thin market liquidity and aggressively sold GBP/USD, triggering a series of stops,” Richard Grace, chief currency strategist and head of international economics at Commonwealth Bank of Australia in Sydney, wrote in a note to clients.

Sterling Pressure

The pound may weaken beyond CBA’s 2017 forecast of $1.20 as the U.K. economy slows further and capital outflows accelerate, Grace wrote. Speculation of further interest-rate cuts by the Bank of England and policy-tightening by the Federal Reserve in December will also pressure sterling, he wrote.

Derek Mumford, a director at Rochford Capital Pty in Sydney, said he and his colleagues were searching for a reason for the pound’s plunge, scanning news-agency reports and the internet.

“The speed of the move looks like a kind of a flash crash, some sort of failure,” Mumford said, adding that sterling is set to drop to $1.15 in the coming weeks if it doesn’t recover above $1.28. “I’m sort of struggling to justify it. I don’t think there’s any shock that the EU will be going for a hard Brexit.”