London Daily

Focus on the big picture.
Wednesday, Jul 30, 2025

Pound hits highest level since before mini-budget

Pound hits highest level since before mini-budget

The pound has hit its highest level since mid-September, as investors welcomed the appointment of Rishi Sunak as prime minister and the dollar fell.

Sterling surged by 1.9% to $1.149 on Tuesday - the highest it has been since before Liz Truss's mini-budget.

Government borrowing costs also fell back to where they were last month, in a boost for Mr Sunak who took over on Tuesday.

Financial markets have been rattled by fears over the economy in recent weeks.

In a speech today Mr Sunak warned the country faced a "profound economic crisis" with "difficult decisions" ahead.

Experts said the pound's strength was partly a "relief rally" after Mr Sunak was appointed, but also due to the dollar's weakness.

The US currency dropped on Tuesday after data showed slowing US house price growth and a decline in US consumer confidence.

"The dollar is losing ground across the board today," said Jeremy Stretch, head of FX Strategy at investment bank CIBC.

"But there's no doubt there's a relief rally here in terms of apparent stability in the macro-economic picture after Sunak came in."

Last month, sterling plunged to a record low against the dollar and government borrowing costs rose sharply in the aftermath of former Prime Minister Liz Truss's mini-budget.

Investors were spooked after then-Chancellor Kwasi Kwarteng promised major tax cuts without saying how they would be paid for - something Mr Sunak warned about during this summer's Tory leadership contest.

Mr Sunak, a former hedge fund manager, is seen as a safer pair of hands by investors and has pledged to fix "mistakes" made under Liz Truss's leadership.

New Chancellor Jeremy Hunt - who reversed almost all of Ms Truss's tax cuts - will keep his job in the new cabinet and is scheduled to set out his economic plan for tax and spending on 31 October.

On Monday Shevaun Haviland, director general of the British Chambers of Commerce, cautioned that the country "cannot afford to see any more flip-flopping on policies".

"The political and economic uncertainty of the past few months has been hugely damaging to British business confidence and must now come to an end," she said.

Borrowing costs fall


On Tuesday government borrowing costs fell back to levels seen just before the mini-budget, with the interest rate - or yield - on bonds due to be repaid in 30 years' time dropping to 3.6%.

Meanwhile, the yield on bonds due to be repaid in five years' time, which underpins the cost of new five-year fixed rate mortgages, fell to 3.7%.

Yields are still well above rates seen this summer but the fall will come as a relief to the government, whose September borrowing figures were the second highest on record.

Mortgage-holders will also hope it feeds through to the mortgage market, where rates hit 14-year highs after the recent turmoil.

On Monday, the deputy governor for markets and banking at the Bank of England, Sir Dave Ramsden, said recent falls in government borrowing costs had shown that "credibility is returning to British economic policy".

Yet despite the improving picture, experts warned Mr Sunak faced tough times ahead.

"The former chancellor has a mammoth task ahead of him as he tackles the mounting economic crisis facing the UK and his warring political party," said CityIndex strategist Fiona Cincotta.

Jordan Rochester, a strategist at Nomura, said every new leader tended to get a "honeymoon period".

"Liz Truss's didn't last very long. The question will be how long does this honeymoon period last for Rishi Sunak?"

Newsletter

Related Articles

0:00
0:00
Close
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
×