Sterling rises after the Bank of England buys bonds

The Bank of England is buying bonds to stabilize financial markets. Subsequently, the pound sterling rose in volatile trading.

Thursday is the second day of a multibillion-pound program aimed at market stabilization. The Bank of England yesterday purchased 1.415 billion pounds ($1.55 billion) worth of British government bonds maturing in more than 20 years. 

Greg Anderson, head of foreign exchange strategy at BMO Capital Markets in New York, said the Bank of England demonstrates creativity and a willingness to respond to volatile markets.

At the same time, he believes that the Bank of England's actions do not lead to sustained growth of sterling.

Anderson also added that whenever the central bank undertakes a temporary intervention program, the market is watching closely to see whether the central bank is going to continue it or not. He does not believe that the pound's parity with the dollar will be disrupted by the Bank of England's actions.

Greg Anderson said he will sell the pound at $1.10, expecting it to return to the $1.05 level.