Pound has risen against US dollar, and government borrowing costs dipped as the markets reacted to Prime Minister Liz Truss’s resignation.
![Pound Rises As Liz Truss Announces Resignation](https://jaybesttrends.com/wp-content/uploads/2022/10/IMG-20221020-WA0035.jpg)
Sterling hit $1.13 immediately Mrs Liz Truss made her announcement and rose higher in the afternoon before falling back to $1.12.
One analyst said that investors were a bit “relieved” by the news, although they don’t know what lies ahead.
Business groups said the new prime minister would have to act quickly to restore their confidence.
A fall in the value of the pound increases the price of goods and services imported into the United Kingdom from other countries – because when the pound is weak against the dollar or euro, for example, it costs more for companies in the United Kingdom to buy things such as food, raw materials, or parts from abroad.
A weaker pound can push rising costs higher as well, if companies choose to pass on higher prices to customers. For people planning a trip Abroad, changes in the pound affect how far money can go abroad.
![Pound Rises As Liz Truss Announces Resignation](https://jaybesttrends.com/wp-content/uploads/2022/10/IMG-20221020-WA0033-1024x682.jpg)
While the pound plunged to a record low against the dollar last month, government borrowing costs rose sharply in the aftermath of the government promising huge tax cuts in its mini-budget without saying how it would pay back for them.
But costs fell back after the Bank of England stepped in with an emergency support programme, and after Jeremy Hunt reversed almost all the mini-budget measures when he became chancellor.
Mr Hunt is due to announce plans for spending and tax on 31 October 2022 in his economic plan, which the Treasury confirmed was set to go ahead, although there are reports that it could be delayed due to the Conservative leadership contest.
“Although the resignation of Liz Truss as prime minister leaves the United Kingdom without a leader when it faces huge economic, fiscal and financial market challenges, the markets appear to be relieved,” said Paul Dales, chief UK economist at Capital Economics.
“But more needs to be done and the new prime minister and their chancellor have a big task to navigate the economy through the cost of living crisis, borrowing crisis, and credibility crisis.”
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