BOE announces temporary purchases of long-term UK government bonds


  • These purchases will aim to restore orderly market conditions
  • Purchases will be made at the scale necessary to achieve this outcome
  • These purchases will be strictly limited in time
  • Auctions will take place from today until October 14
  • The MPC’s annual target of an £80bn stock reduction is unaffected and unchanged
  • The start of gilt sales operations has been postponed to October 31 (first sale)
  • Full statement

And back to QE, well sort of, here we are. Gilt yields fell on the announcement, with 10-year yields now down to 4.37% from around 4.55% previously. The Pound took a bit of a saw at 1.0838 before holding around 1.0680 now as BOE action here is about right to accommodate recent government fiscal measures – since QT would be in contradiction to this.

/GBP

GBP

The Pound Sterling (GBP) or Pound Sterling is the official currency of the United Kingdom, Jersey, Guernsey, Isle of Man, Gibraltar, South Georgia and other Pacific territories. The British pound is currently the fourth most traded currency in the world in foreign exchange markets after the US dollar, the euro and the Japanese yen. As the oldest currency in continuous use, the GBP holds significant weight in the global market and is also the fourth largest reserve currency. The Bank of England (BoE) is the authoritative central bank responsible for curating the GBP, issuing its own banknotes, as well as regulating the issuance of banknotes by private banks in Scotland and Northern Ireland. What factors affect the GBP? Like any widely traded currency, several factors affect the GBP. As is often the case, monetary policy has an extremely important impact. Any announcement or policy decision from the BoE is always closely watched given its potential to move the GBP. Additionally, consumer prices (CPI) in the UK as well as inflation levels carry a lot of weight and regularly affect the value of the GBP in the currency markets. Other metrics of note include measures of UK gross domestic product (GDP) or growth, consumer sentiment or confidence. More recently, the drama surrounding Brexit as well as the potential fallout from the negotiations has added another layer of uncertainty to the GBP. At the time of writing, the UK is heading towards a historic schism with Europe, although an agreement has yet to be reached with the two sides unable to reach a deal. With a smooth resolution nowhere in sight, any development or eventual outcome of Brexit will be hugely important to the GBP’s short- and long-term value.

The Pound Sterling (GBP) or Pound Sterling is the official currency of the United Kingdom, Jersey, Guernsey, Isle of Man, Gibraltar, South Georgia and other Pacific territories. The British pound is currently the fourth most traded currency in the world in foreign exchange markets after the US dollar, the euro and the Japanese yen. As the oldest currency in continuous use, the GBP holds significant weight in the global market and is also the fourth largest reserve currency. The Bank of England (BoE) is the authoritative central bank responsible for curating the GBP, issuing its own banknotes, as well as regulating the issuance of banknotes by private banks in Scotland and Northern Ireland. What factors affect the GBP? Like any widely traded currency, several factors affect the GBP. As is often the case, monetary policy has an extremely important impact. Any announcement or policy decision from the BoE is always closely watched given its potential to move the GBP. Additionally, consumer prices (CPI) in the UK as well as inflation levels carry a lot of weight and regularly affect the value of the GBP in the currency markets. Other metrics of note include measures of UK gross domestic product (GDP) or growth, consumer sentiment or confidence. More recently, the drama surrounding Brexit as well as the potential fallout from the negotiations has added another layer of uncertainty to the GBP. At the time of writing, the UK is heading towards a historic schism with Europe, although an agreement has yet to be reached with the two sides unable to reach a deal. With a smooth resolution nowhere in sight, any development or eventual outcome of Brexit will be hugely important to the GBP’s short- and long-term value.
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