British Chancellor of the Exchequer Kwasi Kwarteng was sacked on Friday as Prime Minister Liz Truss scaled back her proposals for aggressive tax cuts, according to the Times and the BBC.
Truss is expected to make a statement at 9 a.m. ET on Friday to announce that she is turning to the opposite party on her government’s tax cut proposals.
Chancellor of the Exchequer Kwarteng’s pledges to continue cutting income and corporation tax have rattled markets in recent weeks, with yields on gilts – British government bonds – soaring.
Yields on 10-year gilts fell 23 basis points to 3.962% on Friday as investors awaited comments from Truss.
The British pound was down 1.18% against the dollar to trade at $1.1197 at last check, having strengthened on Thursday as markets began to expect a turnaround in policy. The pound has fallen more than 17% against the dollar since the start of the year.
“The removal of Kwarteng as chancellor, making him one of the shortest holders of the office, did little to strengthen the pound, given that it had already rallied yesterday on hopes of a turnaround in the budget,” market major IG Group. said analyst Chris Beauchamp. “Now the market will wait to see what is actually decided before deciding to provide some support to the government in terms of a further bounce in the pound or a fall in gilt yields.”
“Liz Truss is certainly not out of the woods yet,” he added.
Read more: Pound sinks to record low against dollar as UK tax cut plans rattle investors