The pound briefly dropped 1% against dollar on Wednesday before rebounding in highly volatile trading after the Bank of England said it would step back into the bond market.
The Bank said it will carry out temporary purchases of bonds and postpone the planned start of its gilt sale programme.
Sterling was last down 0.6% to $1.0675, after hitting a session low of $1.0618. The euro was up 0.3% against the pound after the Bank's announcement at 89.74 pence.
The Bank's dramatic move came after traders reported disorder in the gilt market.
UK government bonds have cratered in recent days after new Finance Minister
Disclaimer: No Business Standard Journalist was involved in creation of this content