Pound rebounds to highest levels since mini-budget
The value of the pound has rallied back to its highest levels since before Liz Truss’s mini-budget as Rishi Sunak was confirmed as the new Prime Minister.
Sterling lifted 1.9% higher to 1.149 against the US dollar after the new Prime Minister started to confirm appointments in his new Government. The increase saw the pound worth more than at any point since 15 September.
The pound eased back marginally to 1.146 during afternoon trading yesterday in London. It comes following a turbulent period for the currency after Liz Truss was appointed prime minister on 5 September.
The mini-budget, led by Truss and then-chancellor Kwasi Kwarteng, helped to drag sterling to an all-time low of 1.032 against the dollar just days later. The Bank of England responded with a package of emergency Government bond purchases which helped to steady some concerns over higher Government borrowing costs.
New Chancellor Jeremy Hunt has also since scrapped a number of key policies, such as the planned reversal of a corporation tax increase, from the mini-budget update.
On Tuesday, gilt yields, which determine the interest that the Government pays on some of its loans, were also lower. Yields on 30-year gilts were 0.1 percentage points lower at 3.65%, around the levels seen before the mini-budget.
High street firms across England are facing a £2.7 billion tax surge next year after inflation jumped further, with business rates due to increase in April based on inflation recorded last month.