GBPUSD showing signs of slipping as BoE announces additional market support


The BoE has announced an increase in its daily gilt purchases and will implement measures to ensure calm prevails as its emergency bond-buying programme winds up. The central bank intervened in the bond market after the government's mini-budget sparked a sell-off, threatening the UK's pension sector. The emergency intervention is due to end on Friday, 14 October. The measures include:

  1. The bank is ready to increase the size of its daily auctions to ensure the capacity for gilt purchases. Accordingly, the BoE will confirm the maximum auction size each morning at 9 am.
  2. It will launch a Temporary Collateral Repo Facility (TECRF). This structure will help ease liquidity pressures.
  3. The bank will utilise its regular Indexed Long Term Repo operations each Tuesday to support a further easing of liquidity if needed.

GBPUSD has started to retreat over the last few trading days. It now threatens to drop back into the weak area between the lower blue and red bands. Moreover, its stochastic is starting to roll over (blue arrow). The momentum behind the bounce off of the 26 September lows is beginning to wane.


Image by Stefan Schweihofer from Pixabay

Russell Shor

Senior Market Specialist

Russell Shor joined FXCM in October 2017 as a Senior Market Specialist. He is a certified FMVA® and has an Honours Degree in Economics from the University of South Africa. Russell is a full member of the Society of Technical Analysts in the United Kingdom. With over 20 years of financial markets experience, his analysis is of a high standard and quality.


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