The pound is rising after new Prime Minister Rishi Sunak took 10th place

Financial markets have reacted positively to Rishi Sunak’s exit from 10 Downing Street.

Sterling was about 0.4 cent higher, up about 0.3 percent against the dollar to just over 1.13.

Government bond yields fell slightly on the day to 3.72 percent – remaining below the level they were at before the mini-budget was announced just over a month ago.

The FTSE 100 was little changed. It was already trading lower before Mr. Sunak took the top job, and was down about 0.5 percent at 6,977 shortly after midday.

Liz Truss officially became the shortest prime minister in history after King Charles III accepted her resignation, giving place to a new one Mr. Sunak to take power.

The king was “gracious to accept” her resignation after just 49 days in office when they met on Tuesday morning, Buckingham Palace said.

In his first address to the nation as prime minister, Mr Sunak said Britain was in a “deep economic crisis”.

Markets, which had seen devastating chaos during Ms. Truss’s tenure, reacted positively when power passed to Mr. Sunak.

Sterling edged higher and the UK extended gains as investors awaited more details on economic and fiscal policy from new Prime Minister Rishi Sunak.

The pound rose 0.5 percent against the dollar to $1.1300 when Mr. Sunak was appointed prime minister, paring most of the gains made since late last week when Liz Truss announced her resignation. Against the euro, it rose by 0.3 percent to 87.30 points.

Long-term gilt yields, which were at the center of the firestorm that engulfed the markets after the mini-budget, are almost back to where they were before the release of the mini-budget on September 23, indicating greater investor confidence.

Investors are betting that former chancellor Mr Sunak will restore confidence after Ms Truss’s disastrous tenure. Mr Sunak is expected to retain Jeremy Hunt as chancellor, providing what he calls the rest of his cabinet more stability.

UK mortgage rates remain close to highs last seen during the 2008 financial crisis as the country welcomes its third prime minister in seven weeks.

The average two-year fixed-rate loan edged down slightly to 6.54 percent this morning after topping 6.65 percent last week for the first time since August 2008.

The average five-year fixed rate deal also fell to 6.4 per cent, but remains at its highest level since November 2008, according to Moneyfacts.

Rising mortgage costs will be one of the key issues facing Risha Sunak when he takes over from Liz Truss. The jump is starting to take its toll on house prices and increasing pressure on strained household budgets.

“The fall in UK gilt yields suggests one thing, and that is that we are likely to see a budget presented next week, and all indications are that it will be presented by Jeremy Hunt, the current chancellor of the exchequer,” the chief strategist said CMC Markets Michael Hewson. said.

With gilt yields falling, the pound is likely to struggle for gains, “mainly on the basis that the economic outlook for the UK economy remains bleak”, he said.

After Mr Sunak’s speech, the UK stock market was still struggling with the FTSE 100 trading near its lowest levels of the day.

It comes after the Bank of England’s chief economist said the country’s economy could benefit if “other institutions” respected Britain’s institutional framework in recent weeks.

Hugh Peel made a veiled swipe at the government when he also praised the cooperation between the central bank and the Office for National Statistics (ONS) during a speech in London.

It comes days after the Bank’s deputy governor, Sir John Cunliffe, told MPs the government had not fully briefed the Bank on its mini-budget and broad tax-cutting plans before it was unveiled.

Subsequent fears about the large borrowing needed for the mini-budget fueled a sell-off in the bond market and sent the pound to a record low against the dollar.

The financial turmoil led to the appointment of Jeremy Hunt as chancellor, who outlined plans to reverse many policy decisions from the mini-budget.

Mr Peel said on Tuesday that the Government and other agencies should learn from the Bank’s relationship with the ONS.

“This is a model of how British macropoliticians should respect the institutional framework when they interact with each other,” he said.

“In my opinion, we could have won in the last weeks if the interaction between the other institutions had gone according to this pattern.”

The chief economist is one of nine members of the Bank’s Monetary Policy Committee, which will meet next week to decide on the latest interest rate decision.