GBP Surges on US Treasury Announcement

The Pound Sterling (GBP) closed Wednesday at its best level in three months, just above 1.3600, following a Treasury announcement in New York that it would increase liquidity support buyback operations in longer-dated bonds.

The decision to double the size of these operations from $2 billion to at least $4 billion was made on September 9, which led to long yields falling and the Dollar being sold against every major counterpart.

The energy cap increase announced in July also contributed to the rise, with domestic gas prices up 14.7% on the month. However, the Bank of England (BoE) already took this into account when setting interest rates, making the rise a forecasted event rather than a surprise.

Despite the positive news for the GBP, analysts caution that the Pound may not hold its new level due to weak economic data releases expected later in the week.