London Daily

Focus on the big picture.
Saturday, Jul 18, 2026

Liz Truss resignation sparks recovery for pound, shares and government borrowing costs

Liz Truss resignation sparks recovery for pound, shares and government borrowing costs

The markets are likely to reflect jitters in the coming days on whether the new occupant of Number 10 will want to change direction again following the mini-budget U-turns of the past few weeks.

There has been a positive market reaction to the resignation of Liz Truss after just 44 days in office, following the fierce backlash against her economic plan and humiliating climbdown.

News that the prime minister was to make a Downing Street statement sparked a rally for sterling versus the dollar - leaving the UK currency almost a cent up on the day at one stage at almost $1.13 before settling at $1.12 in the late afternoon.

It originally rose half a cent following confirmation she was to leave office.

Shares also moved upwards initially on the FTSE 100 before closing higher than opening trading while government borrowing costs fell.

The 30-year gilt yield fell back to 3.8% - continuing its recovery since the post mini-budget highs of around 5% that sparked Bank of England intervention. As the afternoon progressed the figure rose to the 3.9% of Thursday morning.

It took a series of U-turns on the tax-cutting growth plan, demanded by new Chancellor Jeremy Hunt after the sacking of Kwasi Kwarteng, for market damage to ease.

The reaction to the departure of Ms Truss signalled a measure of relief that the architect of the Growth Plan - outlined during her campaign for the Tory leadership - was on her way out.


Nevertheless, there was also a measure of uncertainty at play for values, given the complete lack of vision on who would replace the prime minister in Number 10.

It will not be Mr Hunt, who has ruled himself out, leaving him free to continue preparations for the Halloween statement that is to set out the government's new medium-term fiscal plan.

There will be some jitters over whether its direction is likely to change - or even be delayed to allow the new Tory leader to get their feet under the desk.

There has been no indication that the statement will be delayed as it is expected that the successor will be in place before 31 October.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said of the market moves: "Sterling is highly sensitive to economic policy uncertainty and even though the ship Britannia will still be left largely rudderless, with a successor still to be chosen, as far as investors are concerned, the future is marginally brighter without her in charge.

"Ten-year gilt yields eased further today, as speculation soared about her resignation, a sign of tacit approval from the bond vigilantes who punished the UK by deserting its government's debt as worries raced up about fiscal responsibility."

Business appealed for a more stable period ahead.

Tony Danker, the director-general of the CBI, said: "The politics of recent weeks have undermined the confidence of people, businesses, markets and global investors in Britain.

"That must now come to an end if we are to avoid yet more harm to households and firms.

"Stability is key. The next prime minister will need to act to restore confidence from day one.

"They will need to deliver a credible fiscal plan for the medium term as soon as possible, and a plan for the long-term growth of our economy."

Pantheon Macroeconomics, the economic research consultancy, said in its October UK economic chartbook: "The economy is heading for a prolonged recession … the MPC [the interest rate setting Monetary Policy Committee] will hike Bank Rate further, but will relent at about 4%."

Newsletter

Related Articles

0:00
0:00
Close
Ukrainian Drone Barrage Kills Eight and Strikes Russian Logistics Network
The Ten World Cup Finals That Defined Football History
Smartphones Are Getting More Expensive, Sales Are Collapsing, and Even Apple Admits: "Prices Will Rise"
The Monaco Bombing Has Become a Test of Ukraine’s Intelligence Accountability
Leadership Change and Strategic Rivalry Redraw the Political Map
Energy Risk, Uneven Growth and the New Geography of Global Capital
The AI Race Enters Its Infrastructure Era
Security and resilience remain long-term national priorities
Britain balances growth ambitions with public finance pressures
Regional devolution becomes a defining theme of the next Labour era
Industrial strategy returns to the centre of British economic policy
Political Instability Remains a Challenge for UK Investment Confidence
Brexit Economic Debate Continues as Public Concerns Over Long-Term Impact Remain
UK Climate Risks Rise as Met Office Warns Extreme Weather Is Becoming More Common
Housing Shortages and Regional Inequality Become Key Priorities Under Incoming Labour Leadership
National Health Service Reform Remains One of Britain’s Biggest Political Challenges
Bank of England Remains at Centre of UK Economic Debate Over Inflation and Growth
UK Economy Shows Recovery Signs but Households and Businesses Remain Under Pressure
Britain Deepens European Defence Cooperation as NATO Allies Seek Stronger Security Capabilities
United Kingdom Expands Sanctions Against Russian Cyber Networks Over Security Threats
UK Industrial Strategy Faces Test After Government Takes Control of British Steel
British Businesses Seek Policy Clarity as Andy Burnham Prepares to Lead Labour Government
Andy Burnham’s Labour Leadership Signals Major Shift Toward Regional Power and Devolution
British Steel Nationalisation Creates New UK-China Tensions Over Control of Strategic Industry
For 36 Years, He Scammed About 300 Luxury Hotels — Until He Was Caught
England's World Cup Exit Expected to Cost Hospitality and Retail £334 Million
Former ICC Prosecutor Aide Speaks Publicly About Allegations Against Karim Khan
Opposition Raises Questions Over June Heatwave Power Grid Pressures
Mastercard Explores Sale of Majority Stake in UK Payments Operator Vocalink
Boeing Forecasts Global Commercial Aircraft Fleet Will Double by 2045
London GP Surgeries Receive £18 Million to Expand Primary Care Capacity
Health Advisers Recommend Nationwide Meningitis B Vaccination for Teenagers
OECD Warns UK Economy Faces Slower Growth and Weak Productivity
Treasury Places Major Global Cloud Providers Under Direct Financial Oversight
Financial Markets Rally as Shabana Mahmood Emerges as Leading Treasury Candidate
Incoming Government Prepares Thames Water Nationalisation and New North Sea Drilling Approvals
UK Government Plans Deep Cuts to Bilateral Aid for African Nations
United States and Iran Exchange Direct Strikes for Seventh Consecutive Night
Incoming Prime Minister Andy Burnham Confirmed as Labour Leader Ahead of Downing Street Handover
Britain Nationalises British Steel to Protect Scunthorpe Production and Strategic Supply
Andy Burnham Takes Labour Leadership and Prepares to Become Britain’s Seventh Prime Minister in a Decade
Tech Companies Want to Move Computing Off Your Screen and Onto Your Body
White House Teleprompter Operator Earned More Than $100,000 From Bets Linked to the President's Speeches
French Prime Minister Survives No-Confidence Vote After Controversial Budget Cuts
European Commission Opens Excessive Deficit Procedure Against France
French Senate Blocks Key Immigration Reform Measures
French Government Pushes EU Action Against Ultra-Fast Fashion Imports
French Parliament Debates Expanded Autonomy Powers for Corsica
France Reopens Autonomy Talks With New Caledonia After Months of Unrest
Bordeaux Wine Producers Seek Three Hundred Million Euro Aid Package After Export Collapse
×