Sterling is underperforming again today despite plans for emergency Bank of England (BoE) bond purchases. Economists at BBH expect the GBP/USD pair to test the low of 1.0350.

BoE to carry out temporary purchases of long-dated gilts

“The BoE noted that to achieve its objective of maintaining financial stability, ‘the Bank will carry out temporary purchases of long-dated UK government bonds from 28 September. The purpose of these purchases will be to restore orderly market conditions.”

“Yet neither higher rates nor the emergency bond-buying plan have done anything for sterling. Market confidence, once lost, is always difficult to regain.” 

“We look for an eventual test of this week’s new all-time low near 1.0350.”