The Bank of England (BoE) made a surprise intermeeting policy announcement to address a dysfunctional Gilt market. Some stability may emerge for GBP near-term, but likely temporary, in the opinion of economists at TD Securities.
Consolidation likely to be shallow and temporary
“The BoE announced the start of a temporary QE programme to target long-dated Gilts, and delayed the start of its Gilt sales programme to the end of October. The MPC will need to take this abrupt shift into account when it sets policy in November.”
“Stability around 1.07 for cable would be a win but ultimately tactical, with 1.0520/1.0350 keys supports below and 1.0931 key resistance above.”
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