Liz Truss resignation sparks recovery for pound, shares and government borrowing costs
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.
Truss resignation – live updates
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.
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Hunt rules out leadership challenge
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%.”
Thousands of troops are taking part in a joint military exercise between Russia and Belarus, as tensions with the EU run high following a Russian drone incursion into Polish airspace earlier this week.
The Zapad joint military exercise which began on Friday will involve drills in both Russia and Belarus as well as in the Baltic and Barents seas, the Russian defence ministry said.
Belarusian defence officials initially said about 13,000 troops would participate in the drill, but in May, its defence ministry said that would be cut nearly in half.
It comes just two days after Poland, with support from its NATO allies, shot down Russian drones over its airspace.
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Poland’s Prime Minister Donald Tusk on Friday morning hit back at a suggestion by US President Donald Trump on Thursday that the incursion may have been a “mistake”.
He said in a post on X: “We would also wish that the drone attack on Poland was a mistake. But it wasn’t. And we know it.”
Russia said its forces had been attacking Ukraine at the time of the incursions and that it had not intended to hit any targets in Poland.
Friday also saw Foreign Secretary Yvette Cooper travelling to Ukraine’s capital of Kyiv on the same day the UK announced fresh sanctions against Moscow.
Prince Harry was also in Kyiv for a surprise visit to help with the recovery of military personnel seriously injured in the three-year war with Russia.
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Prince Harry arrives in Kyiv
Ms Cooper, who was appointed foreign secretary last week, posted about her visit on X saying: “The UK’s support for Ukraine is steadfast. I am pleased to be in Kyiv on my first visit as Foreign Secretary.”
The UK’s new sanctions include bans on 70 vessels that Britain says are part of Russia’s “shadow fleet” that transports Russian oil in defiance of sanctions already in place.
Yvette Cooper with Volodymyr Zelenskyy in Kyiv. Pic: Valentyn Ogirenko/PA
Some 30 individuals and companies – including Chinese and Turkey-based firms – have also been sanctioned for their part in supplying Russia with electronics, chemicals, explosives and other weapons components.
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Meanwhile on the frontline, Ukrainian drones struck Russia’s oil-loading Primorsk port overnight, an SBU official said.
The attack caused fires and suspended oil-loading operations, the official added.
Russian defence systems also intercepted and destroyed 221 Ukrainian drones overnight.
Prince Harry has made a surprise visit to the Ukrainian capital of Kyiv, a spokesperson for the royal has said.
Harry, who served 10 years in the British Army, visited the city at the invitation of the Ukrainian government.
The Duke of Sussex travelled to the capital to help with the recovery of military personnel seriously injured in the three-year war with Russia.
Pic: Railway of Ukraine Ukrzaliznytsia/AP
Foreign Secretary Yvette Cooper will also be travelling to Kyiv on Friday in what will be her first foreign trip since being appointed to the job last week.
Her visit coincides with the UK launching a new package of Russia-related sanctions targeting ships carrying Russian oil as well as companies and individuals supplying electronics, chemicals and explosives used to make Russian weapons.
It comes as Russia and Belarus began a major joint military exercise on on NATO’s doorstep on Friday, just two days after Poland, with support from its NATO allies, shot down suspected Russian drones over its airspace.
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Drones shot down in Poland
The Zapad-2025 exercise – a show of force by Russia and its close ally – will involve drills in both countries and in the Baltic and Barents seas, the Russian defence ministry said.
Meanwhile on the frontline, Russian defence systems intercepted and destroyed 221 Ukrainian drones overnight,
including nine over the Moscow region, the ministry said on Friday.
The duke told the Guardian while on an overnight train to Kyiv: “We cannot stop the war but what we can do is do everything we can to help the recovery process.
“We can continue to humanise the people involved in this war and what they are going through.
“We have to keep it in the forefront of people’s minds. I hope this trip will help to bring it home to people because it’s easy to become desensitised to what has been going on.”
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Harry, who served two tours in Afghanistan, previously travelled to Ukraine in April, when he visited war victims as part of his work with wounded veterans.
The prince visited the Superhumans Center, an orthopaedic clinic in Lviv that treats and rehabilitates wounded military personnel and civilians.
Earlier this week, Harry said the King is “great” after he reunited with him at Clarence House for a private tea.
It was their first meeting in 19 months and lasted just 54 minutes.
The last time the father and son saw each other was in February 2024 when the prince flew to the UK after the monarch announced his cancer diagnosis.
Harry and his wife Meghan Markle have lived in California since they quit roles as senior working royals in March 2020.
Brazil’s former president Jair Bolsonaro has been sentenced to 27 years and three months in prison for attempting a coup to stay in power after his 2022 election defeat.
The far-right politician, who ruled Brazil between 2019 and 2022, is currently under house arrest in the capital, Brasilia.
A panel of five Supreme Court justices handed down the sentence several hours after they found the 70-year-old guilty on five counts.
The counts were trying to stage a coup, being part of an armed criminal organisation, attempting violent abolition of the democratic rule of law, being implicated in violence, and posing a serious threat to the state’s assets and listed heritage.
Bolsonaro‘s lawyers have said they will appeal the verdict.
Pic: AP
The ruling will deepen political divisions in Brazil and is also likely to prompt a backlash from the United States government – with Donald Trump already sharing his thoughts on the vote.
President Trump, an ally of Bolsonaro, has said he was surprised and “very unhappy” with the decision.
Speaking to reporters outside the White House, he said he always found Bolsonaro “outstanding” and said the conviction is “very bad for Brazil”.
Mr Trump previously called the case a “witch hunt”, slapped Brazil with tariff hikes, and revoked US visas for most members of Brazil’s high court.
Bolsonaro is the first former Brazilian president to be convicted of attempting a coup.
He has not attended the court proceedings, and on Thursday, he was seen at the garage of his property, but did not talk to the media.
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Justice Carmen Lucia. Pic: AP
Justice Alexandre de Moraes, who has been overseeing the case, said on Tuesday that Bolsonaro was the leader of a coup plot and of a criminal organisation, and voted in favour of convicting him. Justices Flavio Dino, Carmen Lucia, and Cristiano Zanin sided with Justice Moraes in the trial.
On Wednesday, another justice, Luiz Fux, disagreed and voted to acquit the ex-president of all charges.
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Justice Lucia said she was convinced by the evidence the attorney general’s office put forward against Bolsonaro, saying: “He is the instigator, the leader of an organisation that orchestrated every possible move to maintain or seize power.”
Bolsonaro had been previously banned from running for office until 2030 in a different case.
He is expected to choose an heir who is likely to challenge President Luiz Inacio Lula da Silva next year.
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