The Bank of England The BoE said on Wednesday it was closely monitoring liability-driven investments (LDIs) ahead of the end of the emergency bond-buying program on Friday, Reuters reported. The BoE further reiterated that the UK gilt purchases are a temporary program and will be undone in a smooth and orderly manner.
“It is unreasonable to expect funds to be insured against all outcomes, but tighter regulation is in the works,” the BoE said. He stated that the world financial markets are being affected by what is happening with the British long-term bond market.
The monetary authority warned that it will be a challenge for some families to manage the rising cost of essentials and the rise in interest rates. “If interest rates rise as markets expect, the share of households with high levels of mortgage debt service will reach the pre-financial crisis high by the end of 2023,” the BoE said.
The pound on Wednesday it is showing gains and recovered after a sharp drop that took place at the close on Tuesday. GBP/USD bounced from 1.0920 to 1.1095, while EUR/GBP is closing in on 0.8750.
Source: Fx Street
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