Sterling stabilised against the Dollar on Tuesday as the Bank of England stepped in to provide assurance to markets following significant volatility in the pound and other UK assets.
GBP/USD was trading up 0.9% at 1.0786 at the time of writing.
Full statement from Andrew Bailey, Governor of the Bank of England: https://t.co/GzbJQ6MaNK pic.twitter.com/I3gPAow1NW
— Bank of England (@bankofengland) September 26, 2022
Markets are now pricing in a full 1% move higher in interest rates at the Bank of England’s next meeting. There is also growing speculation the Bank of England will call an emergency meeting to make an interest rate hike.
The pound came under extreme pressure after the UK government released their mini-budget on Friday which would require tax cuts to be funded by government borrowing.
UK 10-year Bond yields rose to 4.2% as investors continued to dump gilts and worries about the UK housing market started to mount as a number of mortgage providers said they were no longer be making mortgage offers due to uncertainty about interest rates.
UK’s Virgin Money, Skipton temporarily withdraw mortgage products – emails to brokers https://t.co/rhG6RFC8Qh pic.twitter.com/4jOeC9jBuh
— Reuters (@Reuters) September 26, 2022