The intervention of the Bank of England (BOE) has breathed new life into the currency market by pushing the pound to rise again.
In an unexpected move, the BOE announced a temporary purchase of long-dated UK government bonds to stabilize markets that have been hit by the UK government's tax cut announcement.
The BOE confirmed that it could buy just £1.025 billion in the emergency operation, well below the planned £5 billion. Long-term bond yields plunged following the announcement.
The central bank also postponed the first bond sale operation that was supposed to start next week to October 31.
Following this move, the pound and several other major currencies posted gains against the US dollar.
However, the relief for the pound may be temporary as the UK still has to deal with larger macroeconomic challenges such as high inflation.
Looking at the movement of the king of currencies, the US dollar again declined from the highest peak of 20 years with the dollar index trading weakly around the price of 113.20 in the Asian session.
This followed a sharp decline in the 10-year US treasury yield at 3.75%, from the 14-year high it hit on Wednesday at 4.00%.
Meanwhile, the euro rose following the decline of the US dollar, but the currency was still hovering around a 20-year low.
