Pound falls after Bank of England jumps into market

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Sterling tumbled against the dollar today before paring some losses after the Bank of England (BOE) said it would step in to prop up the gilt market, and the dollar index touched a fresh 20-year high trading was volatile.

The BOE said it would buy as many long-dated government bonds as needed between now and Oct 14 to stabilise financial markets, and added that it would postpone next week's start of its gilt sale programme.

"They're really trying to help the structure of the gilt market, more than anything else... The fact that they're effectively doing again, while also hiking rates confuses the monetary policy outlook," said Brad Bechtel, global head of FX at Jefferies in New York. Investors were also eyeing the safety of the dollar against a backdrop of political uncertainty after leaks on Nord Stream pipelines between Russia and Europe spewed gas into the Baltic Sea.

The dollar index, which measures the greenback against a group of major currencies, after earlier hitting a fresh 20-year high of 114.78 was last at 114.100.

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