Sterling rose in tumultuous trading on Thursday as the US dollar declined against several currencies, with investors encouraged by the Bank of England’s purchase of long-term bonds to help calm the market.
The pound gained 1.4% to $1.1034 per pound. Sterling has recovered 6.4% against the dollar after touching a new 37-year low of $1.0327 three days ago.
The BoE’s actions contributed to the British pound’s recovery. The Bank of England purchased 1.415 billion pounds ($1.55 billion) of British government bonds with maturities of more than 20 years on Thursday, the second day in a multibillion-pound program to calm the market.
“Sterling is outperforming and this a follow-up from what we saw yesterday,” said Brian Daingerfield, head of G10 FX strategy at NatWest Markets in Stamford, Connecticut.
“The Bank of England took a pretty decisive step to stabilize markets. And that is being taken positively by the currency market,” he added.
Sterling initially fell on Thursday as Prime Minister Liz Truss defended her government tax-cutting budget.
The dollar, on the other hand, slipped against a basket of major currencies. It was last down 0.1% at 112.454 .
The euro rose 0.4% against the dollar to $0.9767 .
Data showed euro zone economic sentiment fell sharply and by more than expected in September as confidence dropped among companies and consumers, who are also downbeat about price trends in the coming months.