AGL 38.54 Increased By ▲ 0.97 (2.58%)
AIRLINK 129.50 Decreased By ▼ -3.00 (-2.26%)
BOP 5.61 Decreased By ▼ -0.03 (-0.53%)
CNERGY 3.86 Increased By ▲ 0.09 (2.39%)
DCL 8.73 Decreased By ▼ -0.14 (-1.58%)
DFML 41.76 Increased By ▲ 0.76 (1.85%)
DGKC 88.30 Decreased By ▼ -1.86 (-2.06%)
FCCL 35.00 Decreased By ▼ -0.08 (-0.23%)
FFBL 67.35 Increased By ▲ 0.85 (1.28%)
FFL 10.61 Increased By ▲ 0.46 (4.53%)
HUBC 108.76 Increased By ▲ 2.36 (2.22%)
HUMNL 14.66 Increased By ▲ 1.26 (9.4%)
KEL 4.75 Decreased By ▼ -0.11 (-2.26%)
KOSM 6.95 Increased By ▲ 0.10 (1.46%)
MLCF 41.65 Decreased By ▼ -0.15 (-0.36%)
NBP 59.60 Increased By ▲ 1.02 (1.74%)
OGDC 183.00 Increased By ▲ 1.75 (0.97%)
PAEL 26.25 Increased By ▲ 0.55 (2.14%)
PIBTL 5.97 Increased By ▲ 0.14 (2.4%)
PPL 146.70 Decreased By ▼ -1.70 (-1.15%)
PRL 23.61 Increased By ▲ 0.39 (1.68%)
PTC 16.56 Increased By ▲ 1.32 (8.66%)
SEARL 68.30 Decreased By ▼ -0.49 (-0.71%)
TELE 7.23 Decreased By ▼ -0.01 (-0.14%)
TOMCL 35.95 Decreased By ▼ -0.05 (-0.14%)
TPLP 7.85 Increased By ▲ 0.45 (6.08%)
TREET 14.20 Decreased By ▼ -0.04 (-0.28%)
TRG 50.45 Decreased By ▼ -0.40 (-0.79%)
UNITY 26.75 Increased By ▲ 0.35 (1.33%)
WTL 1.21 No Change ▼ 0.00 (0%)
BR100 9,809 Increased By 41.1 (0.42%)
BR30 29,711 Increased By 311.1 (1.06%)
KSE100 92,304 Increased By 366.3 (0.4%)
KSE30 28,840 Increased By 96.6 (0.34%)

LONDON: Sterling regained ground against the dollar in volatile trading on Wednesday after the Bank of England (BOE) said it would step in to calm the turbulence in the UK government bond market.

The pound fell as much as 1.74% after the BOE’s announcement but clawed its way back into the green to stand 0.2% higher at $1.0737 in late London trading.

The euro was up 0.4% against the pound at 89.71 pence after paring earlier gains.

UK assets have tumbled in recent days after new Finance Minister Kwasi Kwarteng on Friday announced a swathe of tax cuts to be funded by borrowing. The pound, which is down more than 20% this year, dropped to a record low of $1.0327 on Monday.

Stress has been most apparent in government bond markets, where prices have tumbled and yields have surged.

The BOE decided it had to step in on Wednesday, saying it had seen “dysfunction” in the market for long-dated gilts and that it would buy up to 65 billion pounds worth of assets to rectify the situation.

Bond prices rallied sharply, with the yield on the benchmark 30-year gilt falling more than a percentage point.

Chris Turner, head of markets at ING, said a delayed positive reaction to the BOE’s intervention may have boosted the pound.

“Given that the sell-off in gilts since early August had been a big factor driving sterling weakness, today’s intervention will be welcomed by some,” he said.

The pound was aided by a reversal in the dollar on Wednesday, as US bond yields fell sharply along with those in the UK.

The dollar index was last down 0.42%. That undid earlier gains which had seen the currency hit new 20-year highs.

Despite the recovery in the pound, Turner said many investors will remain pessimistic and trading will stay febrile. The BOE’s move “effectively provides room for the government to continue with its aggressive fiscal programme”, he said.

Comments

Comments are closed.