UK Chancellor, BoE Governor to cut maximum size of APF

An exchange of letters between the governor of the Bank of England and the UK's Chancellor on the asset purchase facility has shown that there will be a cut of the maximum size of the Asset Purchasing Facility, APF.

The maximum size of the APF authorized has been cut to GBP871 bln, of which GBP16.4 bln can be corporate bonds.

Meanwhile, the BoE had confirmed its plan to continue with the gilt sales operation from Nov 1 onward, analysts at TD Securities explained. ''However, for Q422 APF sales operations will be distributed evenly only across the short and medium-maturity sectors, with the pace and frequency of sales in line with its original plans. The maturity split of gilt sales for subsequent quarters will be considered ahead of Q1 2023. The detailed auction calendar will be released on Oct 20.''

GBP/USD update

GBPUSD rose on Tuesday in a risk-on day after falling in the previous session, as the dollar retreated following three days of gains. Cable has rallied sharply in recent weeks after touching a record low of 1.0327 in September when the government unveiled plans for large unfunded tax cuts. At the time of writing, GBP/USD is trading at 1.1880 and up some 0.5%.