London: The British pound has fallen sharply against the dollar after Bank of England Governer Andrew Bailey warned that it would not extend its emergency intervention in financial markets beyond this week, after the turmoil sparked by the governments mini-budget.
The currency skidded by more than a cent against the dollar to below $1.10 after the Bank’s governor insisted the 65 billion pound scheme to purchase UK government bonds would not be continued beyond the deadline on Friday, The Guardian reported.
Pensions industry leaders and one of the Bank’s former deputy governors had earlier called for an extension to mop up the ongoing bond market fallout triggered by Chancellor Kwasi Kwarteng’s ill-received mini-budget last month
The central bank had started the day by saying it would revamp the scheme’s bond-buying firepower — within the existing timeframe — for a second time in as many days, warning there were still “material risks” in government debt markets affecting UK pension funds.
However, it ended with Bailey saying the intervention must end this week, telling an event organised by the Institute of International Finance in Washington: “We have announced that we will be out by the end of this week. We think the rebalancing must be done.
“My message to the funds involved and all the firms involved managing those funds: You’ve got three days left now. You’ve got to get this done.”
It comes after the International Monetary Fund added to pressure on Liz Truss’ government to U-turn on unfunded tax cuts announced in last month’s mini-budget, saying changes in policy would help calm jittery financial markets, The Guardian reported.
–IANS