Forex traders and investors responded to the terrorist attacks which rocked London today by sending the British Pound to near 18-month lows against the USD.  As soon as the news reached the trading floors of forex dealers, panic set in, and the Pound quickly lost 1% of its value, relative to the USD. Experts agree both the attack-and the ensuing panic in the markets-could have been far worse.  One trader spoke of a “risk premium” which has been built into the currencies of nations that are potentially susceptible to terrorism, and probably prevented the Pound from depreciating further. Investors begin to understand the relatively minor implications of this latest attack, the Pound may well recover.  Forbes reports:

“The knee-jerk reaction was quite violent across all markets and the usual safe-haven trades were being put on,” said one currency strategist.  “The market is now backing off a little and questioning the magnitude of the implications.”

Read More: Sterling hits 18-month low against dollar