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    BARC   GB0031348658

BARCLAYS PLC

(BARC)
  Report
Delayed London Stock Exchange  -  11:35 2022-11-30 am EST
161.24 GBX   +0.15%
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Sterling pares losses against dollar as BOE resumes bond purchases

09/28/2022 | 09:25am EST

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Graphic: World FX rates in 2020 http://tmsnrt.rs/2egbfVh

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Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv

LONDON, Sept 28 (Reuters) - Sterling regained ground against the dollar in volatile trading on Wednesday after the Bank of England (BOE) said it would step in to calm the turbulence in the UK government bond market.

The pound fell as much as 1.74% after the BOE's announcement but clawed its way back into the green to stand 0.2% higher at $1.0737 in late London trading.

The euro was up 0.4% against the pound at 89.71 pence after paring earlier gains.

UK assets have tumbled in recent days after new Finance Minister Kwasi Kwarteng on Friday announced a swathe of tax cuts to be funded by borrowing. The pound, which is down more than 20% this year, dropped to a record low of $1.0327 on Monday.

Stress has been most apparent in government bond markets, where prices have tumbled and yields have surged.

The BOE decided it had to step in on Wednesday, saying it had seen "dysfunction" in the market for long-dated gilts and that it would buy up to 65 billion pounds worth of assets to rectify the situation.

Bond prices rallied sharply, with the yield on the benchmark 30-year gilt falling more than a percentage point.

Chris Turner, head of markets at ING, said a delayed positive reaction to the BOE's intervention may have boosted the pound.

"Given that the sell-off in gilts since early August had been a big factor driving sterling weakness, today’s intervention will be welcomed by some," he said.

The pound was aided by a reversal in the dollar on Wednesday, as US bond yields fell sharply along with those in the UK.

The dollar index was last down 0.42%. That undid earlier gains which had seen the currency hit new 20-year highs.

Despite the recovery in the pound, Turner said many investors will remain pessimistic and trading will stay febrile. The BOE's move "effectively provides room for the government to continue with its aggressive fiscal programme", he said.

The International Monetary Fund on Tuesday released a statement saying "we do not recommend large and untargeted fiscal packages" at the same time as monetary policy is being used to tackle high inflation. It suggested the UK government "reevaluate" its plans.

Ratings agency Moody's also weighed in on Tuesday, saying the unfunded tax cuts were "credit negative" and likely to weigh on growth.

Strategists at Barclays cautioned that any respite for the pound might not last long, with storm clouds still hanging over the UK economy.

"The currency is likely to be the easiest 'release valve' as investors come to terms with recent policy actions," they said in a note to clients on Wednesday. (Reporting by Harry Robertson; Editing by Amanda Cooper, Frank Jack Daniel, Catherine Evans and Ed Osmond)


ę Reuters 2022
Stocks mentioned in the article
ChangeLast1st jan.
AUSTRALIAN DOLLAR / BRITISH POUND (AUD/GBP) 0.69% 0.56306 Delayed Quote.3.70%
AUSTRALIAN DOLLAR / EURO (AUD/EUR) 0.80% 0.65229 Delayed Quote.0.68%
BARCLAYS PLC 0.15% 161.24 Delayed Quote.-13.90%
BRITISH POUND / AUSTRALIAN DOLLAR (GBP/AUD) -0.71% 1.77517 Delayed Quote.-3.52%
BRITISH POUND / CANADIAN DOLLAR (GBP/CAD) -0.20% 1.61935 Delayed Quote.-5.64%
BRITISH POUND / EURO (GBP/EUR) 0.09% 1.15812 Delayed Quote.-2.82%
BRITISH POUND / JAPANESE YEN (GBP/JPY) 0.32% 166.266 Delayed Quote.6.52%
BRITISH POUND / NEW ZEALAND DOLLAR (GBP/NZD) -0.74% 1.91329 Delayed Quote.-1.90%
BRITISH POUND / SWISS FRANC (GBP/CHF) -0.13% 1.13899 Delayed Quote.-8.09%
BRITISH POUND / US DOLLAR (GBP/USD) 0.78% 1.20393 Delayed Quote.-11.61%
CANADIAN DOLLAR / BRITISH POUND (CAD/GBP) 0.21% 0.617665 Delayed Quote.5.97%
CANADIAN DOLLAR / EURO (CAD/EUR) 0.32% 0.715313 Delayed Quote.2.92%
EURO / BRITISH POUND (EUR/GBP) -0.07% 0.86337 Delayed Quote.2.92%
FTSE 100 0.81% 7573.05 Delayed Quote.1.73%
INDIAN RUPEE / BRITISH POUND (INR/GBP) -0.06% 0.010251 Delayed Quote.3.22%
INDIAN RUPEE / EURO (INR/EUR) 0.00% 0.01186 Delayed Quote.0.40%
MOODY'S CORPORATION 1.29% 293.49 Delayed Quote.-25.27%
UK 10Y CASH -0.01% 3.1651 Delayed Quote.243.73%
US DOLLAR / BRITISH POUND (USD/GBP) -0.78% 0.830841 Delayed Quote.13.11%
US DOLLAR / EURO (USD/EUR) -0.69% 0.962019 Delayed Quote.9.94%
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Analyst Recommendations on BARCLAYS PLC
More recommendations
Financials
Sales 2022 25 117 M 30 072 M 30 072 M
Net income 2022 4 992 M 5 977 M 5 977 M
Net Debt 2022 - - -
P/E ratio 2022 5,45x
Yield 2022 4,47%
Capitalization 25 553 M 30 594 M 30 594 M
Capi. / Sales 2022 1,02x
Capi. / Sales 2023 0,98x
Nbr of Employees 81 600
Free-Float 99,7%
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Technical analysis trends BARCLAYS PLC
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Mean consensus OUTPERFORM
Number of Analysts 22
Last Close Price 161,00 GBX
Average target price 231,74 GBX
Spread / Average Target 43,9%
EPS Revisions
Managers and Directors
C. S. Venkatakrishnan Group Chief Executive Officer & Director
Angela Anna Cross Group Finance Director & Executive Director
Nigel Paul Higgins Group Chairman
Mark Ashton Rigby Group Chief Operating Officer
Laura Padovani Global Head-Compliance Services
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