Value of the pound falls below $1.12, from $1.13

During a chaotic day that saw her replace Chancellor Kwasi Kwarteng, Liz Truss said that the Government would reverse its decision to cancel the anticipated increase in corporate tax. This news caused the value of the pound to decline.

Before the Prime Minister’s address, sterling had somewhat recovered some of its early losses, but it afterwards fell again, suggesting that markets still feel more action has to be done.

Following the announcement, the pound fell 1.2% to 1.119 versus the US dollar.

Ms. Truss said that the government’s economic policy and projections from the Office for Budget Responsibility will be released on October 31.

She said that the Government would now backtrack on more than £18 billion in spending pledges from the mini-budget by abandoning her proposal to reduce the scheduled increase in corporate tax from 19 to 25 percent.

Another increase in gilt rates, which climb when bond prices decrease, was spurred by her news conference.

The cost of governmental borrowing climbed as the yield on 30-year UK Government bonds rose by 2.86 percent, or 0.13 percentage points, to 4.7%.

Following the announcement soon before 12.30pm today that Mr. Kwarteng had been relieved of his responsibilities by a troubled Liz Truss, the pound dropped 1.2% from $1.13 to $1.119 versus the dollar.

The FTSE 100 also suffered, falling from its day’s high of 6,946 to 6,903 at one in the afternoon.

However, the pound had risen back to little below $1.13 as Number 10 announced shortly before 2pm that Mr. Hunt had taken over as Chancellor in lieu of Mr. Kwarteng, and the FTSE had risen to 6,972.

From 2012 until 2018, Mr. Hunt served as Health Secretary. In 2018, he was appointed Foreign Secretary, a position he held until the end of Theresa May’s tenure in July 2019.

With his resignation, Mr. Kwarteng has served as chancellor for the second-shortest period in modern British politics, after only Iain Macleod, whose career was cut short by his passing in 1970 after just 30 days in office.

Since 2019, the UK has had four chancellors, including Sajid Javid, who served for 204 days, the fourth-shortest tenure ever, and Nadhim Zahawi, who held the position for 62 days during a hastily implemented reshuffle under Boris Johnson.

A few time after learning of his dismissal, Mr. Kwarteng published a letter to the prime minister on Twitter.

He said that he had “accepted” Ms. Truss’s suggestion that he’stand down’ as chancellor.

He said, “When you asked me to be your Chancellor, I did so well aware of the very challenging circumstances we faced, with increasing global interest rates and energy costs.

But you were correct to see progress, excitement, and change. I’ve said several times over the last few weeks that maintaining the status quo was not an option.

“This nation has been plagued by excessive taxes and poor growth rates for far too long; if this country is to prosper, this must change.

Since we announced the Growth Plan on September 23, the economic landscape has swiftly shifted.

We have reacted to those occurrences in conjunction with the Bank of England and good Treasury officials, and I applaud my colleagues for their choice.

“It is critical that we continue to emphasize your government’s commitment to economic restraint.

The Medium-Term Fiscal Plan is essential to achieving this goal, and I look forward to working with my successor and you to make it happen from the opposition benches.

‘For many years, we have been both coworkers and friends. I have seen your commitment and tenacity throughout that period. I think your perspective is correct. Being your first Chancellor has been an honor.

“I wish you well,” I said, “because your success is this country’s prosperity.”

As a “safe pair of hands,” Mr. Hunt is making a startling comeback to the cabinet.

Concerning the possibility of Mr. Hunt taking over at No. 11, one perplexed Cabinet insider told MailOnline: I believe my rationality barometer is malfunctioning.

After a string of errors, including tweeting that the pound was strengthening during Mr. Kwarteng’s mini-Budget address – minutes before it plummeted – Chris Philp was also fired as Treasury Chief Secretary. With Paymaster General Edward Argar, he is trading jobs.

With rumors that Rishi Sunak and Penny Mordaunt, both unsuccessful leadership candidates in the summer, are being lined up to succeed her, mutinous Conservative MPs have given the PM 17 days to save her position.

The timing of Mr. Kwarteng’s economic statement, which was scheduled for October 31, is now uncertain in light of the Chancellor’s resignation.

Since Mr. Kwarteng announced tax cuts last month that were financed by borrowing, the markets have been turbulent and the Conservative Party has been agitated.

Following a backlash, the government was forced to declare a U-turn and restore the 45p income tax rate for the UK’s wealthiest citizens.

The Chancellor said yesterday when asked if another embarrassing U-turn was possible: “Let’s see.”

As the Bank of England’s bond-buying program draws to an end, government bonds and the pound stabilized at the opening of London trade, a hint that markets are pricing in a U-turn.

After Kwarteng disclosed unfunded tax-cutting proposals in the mini-budget last month and again earlier this week, gilt yields, or UK government bonds, soared during a sell-off.

When the markets opened, the rates on UK 30-year gilts dropped by 1.6% to 4.47%, while the yields on 10-year gilts decreased by 1.8% to 4.1%.

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