Gilts and pound rise after Bank of England resists QE urge
Gilts also rose, pushing yields down, as investors sought a safe haven for their funds in the face of fresh concerns about peripheral European economies.
The day was topped off by a strong stock market rally, with the FTSE 100 index rising 113.82 to hit a 28-month high of 5862.79 and the more UK-specific FTSE 250 jumping 140.18 to a three-year peak of 11,016.46.
The pound’s rise of 2.03 cents to $1.6282 was driven by the weak dollar, which tumbled against all major currencies on the back of the US Federal Reserve’s plan to inject a further $600bn into the economy. The Dow Jones industrial average was 1.7pc higher at 11405.63 in afternoon trade.
Yields on 10-year UK gilts initially rose before falling five basis points to 2.95pc.
Traders raised concerns that the pound’s strength could damage exporters, but the stock market pick-up was seen as a fresh sign of optimism. The Fed’s actions are expected to help stimulate the US economy, which will lift global growth.
European stocks also rose to a six-month high after the European Central Bank held rates unchanged.
Oil prices rose to a six-month high, up $1.53 to $86.22 a barrel, as a result of the weak dollar.
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Tags: Gilts, Gilts Pound