Pound surges higher as new Chancellor to unveil emergency budget plan
The Treasury’s announcement came ahead of markets opening for the first time since the Bank of England ended its gilt-buying scheme.
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Your support makes all the difference.The pound has jumped higher on news that new Chancellor Jeremy Hunt is to make an emergency statement on Monday to calm the chaos in the financial markets.
Sterling leapt to 1.129 US dollars at one stage, having kicked off more nervously, dipping to 1.122 against the greenback in overnight trading ahead of what many have feared would be a testing day on markets.
The Treasury’s announcement of an emergency fiscal statement came before markets opened for the first time since the Bank of England ended its government bond-buying scheme, with all eyes on the reaction in gilt trading.
The Bank stuck to its guns by ending its emergency gilt-buying programme on Friday despite fears it would see a return to volatile market conditions which sparked a damaging sell-off in gilts that left some pension funds on the verge of collapse.
Mr Hunt’s move also comes as speculation swirls over Liz Truss’s future as Prime Minister.
Today’s developments may hold off a fresh assault on government borrowing costs by the bond vigilantes standing by in the UK gilt market, but it could only be a temporary reprieve
Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “New Chancellor Jeremy Hunt has the air of a troubleshooting teacher brought in to turn around a failing school and faces his first big presentation test today with an emergency budget plan wheeled out to try and calm financial markets.
“This is all part of his charm offensive to instil confidence in the Government’s ability to be fiscally responsible, but behind him unruly pupils are still scheming.”
She added: “Today’s developments may hold off a fresh assault on government borrowing costs by the bond vigilantes standing by in the UK gilt market, but it could only be a temporary reprieve.
“Trussenomics may have been ripped up and fed to the shredder but the author of the big gamble remains in power, and has the final say on the direction of travel.
“Investors are craving more stability but, given the flip-flopping we’ve had so far in her super-short tenure, economic policy uncertainty remains and that’s likely to be the key driver in the bond markets and on foreign exchange desks.”