OREANDA-NEWS Bond-market intervention announced by the Bank of England on Wednesday sent sterling sliding by more than 1% to 1.0763 against the US dollar after temporarily recovering by nearly 5% from the historic lows it reached earlier this week.

The regulator said it would carry out temporary purchases of bonds and postpone the planned commencement of its gilt sale program. It indicated that it would buy as much as £5 billion ($5.4 billion) per day of long-dated government bonds until October 14.  

The bank spent nearly £1 billion on Wednesday as 30-year gilt yields dropped 105 basis points (bps), the biggest decline ever, according to Refinitiv records stretching back to 1992.

UK government bonds have cratered in recent days after newly appointed finance minister Kwasi Kwarteng said his ministry would slash taxes and ramp up borrowing. The announcement sent yields, which move inversely to prices, surging.

On Monday, Kwarteng’s fiscal statement, along with a vow that there was more to come, sent sterling crashing to a record low of $1.0327. On Tuesday, the pound reduced some of its losses after Huw Pill, the Bank of England’s chief economist, suggested the regulator would have to hike interest rates sharply in November.