fbpx

PU Prime App

Exclusive deals on mobile

  • Market Insights  >  Weekly Outlook

29 September 2022,03:11

Weekly Outlook

Pound Freefall Prompts BoE Emergency Bond-Buying

29 September 2022, 03:11

Share on:
FacebookLinkedInTwitterShare
Share on:
FacebookLinkedInTwitterShare

The Bank of England, the UK’s Central Bank, has announced this week a temporary gilt-buying programme to urgently respond to a “material risk to UK financial stability”. This comes as gilt yields were on course for record highs as investors exited UK’s bonds after the government announced underfunded tax cuts and increased spending even as other countries continue tightening their monetary policy. The pound fell to a 37-year low on Monday, hitting 1.04 against the dollar. 

The BoE said in a statement: “This repricing has become more significant in the past day — and it is particularly affecting long-dated UK government debt.

“Were dysfunction in this market to continue or worsen, there would be a material risk to UK financial stability…”

While no number has been announced by the central bank, it initially plans to hold daily auctions to buy up to 5 billion pounds of gilts with a maturity of at least 20 years, between now and 14 October. 

Post-Market

Markets found a measure of calm at the BoE’s announcement, with US stocks ending 6 straight days of losses. The Dow rose 1.9%, exiting bear market territory; while the S&P 500 and Nasdaq both climbed 1.97%. 

Predictable, the pound rebounded, gaining 1.42%, while the euro gained 1.45% for the day. The dollar, in response, declined sharply in the risk-off environment – although with a foreseeably capped downside as the reality of further Fed policy tightening remains. 

US bond yields were also pushed down, with the 10-year note pulling from above 4% to 3.7%.

Even with a focus on government spending to boost economic growth, the BoE cannot ignore rampaging inflation, with the central bank stating that it “will not hesitate” to hike rates to control inflation, which read 9.9% in August. The BoE’s rates are now at 2.25% after September’s more-dovish-than-expected 0.5% hike. 

Pound traders are now advised to look out for the UK’s GDP figures, which will be released at 09:00 (GMT+3) on Friday, 30 September. For clues on the wider markets, US quarter-on-quarter GDP figures will be released later today at 15:30 (GMT+3).

As a friendly reminder, do keep an eye on market changes, control your positions, and manage your risk well. 

엣지 있게 거래 시작하기

업계 최저 스프레드와 초고속 실행으로 FX, 지수, 귀금속 등을 거래하실 수 있습니다!

  • 당사의 스탠다드 계좌는 최소 $50달러로 거래를 시작할 수 있습니다.
  • 24시간 연중무휴 고객지원
  • 수백 개의 거래 도구, 무료 교육 도구 및 최고의 프로모션을 누릴 수 있습니다.
지금 가입하기

Latest Posts

쉽고 빠른 계좌 개설

실거래계좌개설
  • 1

    회원가입

    몇 가지 간단한 과정으로 PU Prime의 실거래 계좌를 개설하세요

  • 2

    자금예치

    다양한 입출금 수단과 수용되는 통화로 손 쉽게 계좌에 예치할 수 있습니다

  • 3

    거래시작

    업계 최고의 거래 환경과 조건에서 수백 개의 상품을 거래하세요

Please note the Website is intended for individuals residing in jurisdictions where accessing the Website is permitted by law.

Please note that PU Prime and its affiliated entities are neither established nor operating in your home jurisdiction.

By clicking the "Acknowledge" button, you confirm that you are entering this website solely based on your initiative and not as a result of any specific marketing outreach. You wish to obtain information from this website which is provided on reverse solicitation in accordance with the laws of your home jurisdiction.

Thank You for Your Acknowledgement!

Ten en cuenta que el sitio web está destinado a personas que residen en jurisdicciones donde el acceso al sitio web está permitido por la ley.

Ten en cuenta que PU Prime y sus entidades afiliadas no están establecidas ni operan en tu jurisdicción de origen.

Al hacer clic en el botón "Aceptar", confirmas que estás ingresando a este sitio web por tu propia iniciativa y no como resultado de ningún esfuerzo de marketing específico. Deseas obtener información de este sitio web que se proporciona mediante solicitud inversa de acuerdo con las leyes de tu jurisdicción de origen.

Thank You for Your Acknowledgement!