The Bank of England announced on Wednesday that it will carry out temporary purchases of long-dated UK government bonds from September 28, as reported by Reuters.

"The purpose of these purchases will be to restore orderly market conditions," the BoE explained.

Key takeaways from the announcement

"The purchases will be carried out on whatever scale is necessary to effect this outcome."

"BoE stands ready to restore market functioning and reduce any risks from contagion to credit conditions for UK households and businesses."

"Financial Policy Committee noted the risks to UK financial stability from dysfunction in the gilt market."

"These purchases will be strictly time-limited."

"Auctions will take place from today until 14 October."

"The purchases will be unwound in a smooth and orderly fashion once risks to market functioning are judged to have subsided."

"MPC annual target of £80 billion stock reduction is unaffected." 

Market reaction

With the immediate reaction, the GBP/USD pair spiked to a daily high of 1.0840 but quickly reversed its direction. As of writing, the pair was down 0.8% on the day at 1.0645.