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GBP pandemonium as BoE denies report it will extend vital support

The pound has risen slightly again to $1.103 as mixed messages from the Bank of England cause market turmoil. On Tuesday, BoE governor Andrew Bailey said he would pull the plug on the £65billion bond-buying programme that has helped to calm the markets, by the end of the week. Sterling fell by 1.3 percent to $1.10 following the announcement. However, the Financial Times then reported that the Bank of England has signalled privately to investors that it could prolong bond purchases past this Friday’s deadline – a move that boosted the pound back up. A number of bankers briefed by the BoE have said that officials are waiting to see whether so-called liability-driven investment managers, which help pension funds manage risks in their portfolios, have had enough time to build up enough cash reserves to enable their clients to meet margin calls.

Despite this, a spokesperson for the Bank of England has insisted that the scheme will end on Friday as planned, dropping the pound once more.

The BoE was forced to intervene two weeks ago to buy government bonds to help pension schemes that have suffered since the announcement of Kwasi Kwarteng’s budget on September 23. 

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