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.
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.
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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.
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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%.”
At least 34 people – including two children – have been killed after a Russian missile attack on a Ukrainian city.
The country’s state emergency service said another 117 people have been injured, with 15 children among them, in the northeastern city of Sumy.
Ukraine’sforeign ministry later added that one of the children injured was a baby girl born this year, saying “even newborns are targets for Russia’s crimes”.
Volodymyr Zelenskyy also shared videos on Telegram of the aftermath of the attack on social media, showing dead bodies in the middle of a city street near a destroyed bus.
Image: Two children were killed in the strike. Pic: State Emergency Service of Ukraine
Russia ‘dragging out this war’ – Zelenskyy
The Ukrainian president said on social media “only scoundrels can act like this” and that “tough reaction from the world is needed”.
“Russiawants exactly this kind of terror and is dragging out this war,” he added. “Without pressure on the aggressor, peace is impossible.
“Talks have never stopped ballistic missiles and air bombs. We need the kind of attitude towards Russia that a terrorist deserves.”
Andriy Kovalenko, a security official who runs Ukraine’s centre for countering disinformation, noted the strike came after a visit to Moscow by US envoy Steve Witkoff.
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From Saturday: Putin meets Trump envoy for talks
US official: ‘This is wrong’
Keith Kellogg, Donald Trump‘s envoy for the Ukraine war, said the attack crosses “any line of decency” and that “there are scores of civilian dead and wounded”.
He added: “As a former military leader, I understand targeting and this is wrong. It is why President Trump is working hard to end this war.”
In response to Mr Kellogg, Mr Zelenskyy’s communications adviser, Dmytro Lytvynm asked: “Don’t you think it’s time to smack the Moscow mule across the nose with a 2X4?”.
Later, US secretary of state Marco Rubio said the strike was “horrifying” and a “tragic reminder of why President Trump and his Administration are putting so much time and effort into trying to end this war and achieve durable peace”.
Image: Pic: AP
UK Foreign Secretary David Lammy added he was “horrified” by Russia’s “barbaric strike” on Sumy, and called for an “immediate ceasefire”.
Meanwhile, EU Commission President Ursula von der Leyen said “cruelty struck again” and called the strike a “blatant violation of international law”.
It came hours before a separate Russian strike killed three people in the central district of the southern city of Kherson.
The local governor, Oleksandr Prokudin, said a 68-year-old woman was injured and died in hospital and that a 48-year-old man also died after “the occupiers dropped an explosive device from a drone”.
A 62-year-old woman was also killed “as a result of the shelling”.
On Saturday, a Russian guided bomb hit a house in the northeastern Ukrainian town of Kupiansk on Saturday, injuring four people.
Governor Oleh Syniehubov said on Telegram that three others could be trapped under rubble.
It comes after Russian diplomats accused each other of violating a tentative US-brokered deal to pause strikes on energy infrastructure.
“The Ukrainians have been attacking us from the very beginning, every passing day, maybe with two or three exceptions,” Sergey Lavrov, Russia’s foreign minister, said, adding that Moscow would provide a list of Kyiv’s attacks from the past three weeks.
Andrii Sybiha, his Ukrainian counterpart, dismissed the claim saying on Saturday that Russia launched “almost 70 missiles, over 2,200 [exploding] drones, and over 6,000 guided aerial bombs at Ukraine, mostly at civilians” since agreeing to the limited pause on strikes.
He may not be the one to sit down with Vladimir Putin, but Keith Kellogg, President Trump’s special envoy for Ukraine, summed up the horror of Sunday’s ballistic missile strikes on Sumy succinctly.
“Today’s Palm Sunday attack by Russianforces on civilian targets in Sumy crosses any line of decency,” he said.
“As a former military leader, I understand targeting and this is wrong.”
He does not seem to care if he alienates his US counterpart, who has been strangely predisposed to fawn over him to date.
Perhaps he is raising the stakes as high as he can to illustrate his strength of hand: Strikes on civilians damage Ukrainianmorale – even if they are hardly battlefield wins – and on the battlefield, he is pushing ahead and does not want to stop.
Image: At least 34 people, including two children, were killed in Sumy on Sunday. Pic: Reuters
Perhaps he knows that if he keeps up his military momentum, President Trump will tire of a conflict he realises he cannot solve and let the matter slip while staying true to his MAGA-economic priorities by letting funds for Ukraine dry up.
Perhaps he thinks President Trump is so keen on a rapprochement with Russia, on the big Putin-Trump bilateral, that the details, the civilian deaths along the way, will all be by-the-by when that long-sought photo-op finally happens.
Whatever it is, President Putin seems to be in no rush to get things settled.
His spokesman told a Russian state reporter on Sunday that talks were under way at several levels but that “of course, it is impossible to expect any instant results”.
Withdrawing his troops would get instant results. But that is not what Vladimir Putin wants.
His war economy is working for him, and he has the attention of the one country he considers a worthy adversary, the United States.
In the meantime, this attack reinforces why President Zelenskyy’s plea for air defence systems is his top priority. And why a ceasefire cannot come soon enough.
An Israeli air strike has hit a hospital in Gaza City, with pictures showing the devastating aftermath at some of its wards.
The al-Ahli Arab Baptist Hospitalwas hit by multiple missiles, the Hamas-run health ministry said, adding hundreds of patients, medical personnel, and their companions were on site at the time of the attack.
It said the Israeli army had targeted what it described as “one of the oldest and most vital healthcare institutions operating in the GazaStrip”.
One patient died during the evacuation as medical staff were unable to provide urgent care, it said.
No other casualties have been reported.
Image: Pic: AP
The Israeli Defence Forces (IDF) said they “struck a command and control centre used by Hamas” in the hospital.
“The compound was used by Hamas terrorists to plan and execute terror attacks against Israeli civilians and IDF troops,” they said in a statemement.
“Prior to the strike, steps were taken to mitigate harm to civilians or to the hospital compound, including issuing advanced warnings in the area of the terror infrastructure, the use of precise munitions, and aerial surveillance.
“The Hamas terrorist organisation systematically violates international law while using civilian infrastructure, brutally exploiting the civilian population as a human shield for its terrorist activities.”
The health facility’s director, Dr Fadel Naim, said they were warned of the attack beforehand.
Image: A closer look at what was the hospital’s outpatient and laboratory wards. Pic: AP
Image: Pic: AP
Hamas has denied using hospitals for military purposes throughout the war and has accused Israel of intentionally targeting its medical infrastructure in its ongoing offensive.
The latest strikes come after Israel ended its ceasefire with Hamas and restarted its air and ground offensive.
Prime Minister Benjamin Netanyahu’s government has also imposed a month-long blockade on food, fuel and humanitarian aid – a tactic that rights groups say is a war crime.
Israel reconstructs Morag corridor
Image: The Morag Corridor under construction. Pic: IDF
On Saturday, Israel said it had completed the construction of a new security corridor that cuts off the southern city of Rafah from the rest of Gaza.
The security corridor was referred to by Israeli officials as the Morag Axis, a reference to a former Israeli settlement previously located in an area between the two southern cities of Rafah and Khan Younis.
The prime minister said the move gives Israel control of a second axis in southern Gaza in addition to the Philadelphi Corridor, running along the border with Egypt, which Israel sees as a key line stopping weapons being smuggled into Gaza.
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Israeli forces encircle Rafah
Israel has also gained control of the Netzarim Corridor, which cuts off the northern third of Gaza from the rest of the territory.
Morag’s construction is part of Israel’s pledge to seize large parts of Gaza to pressure Hamas to release remaining hostages and accept proposed ceasefire terms, and it further squeezes Palestinians into shrinking areas of land.
In a statement on Saturday, Israel’s defence minister Israel Katz said his country’s military would soon expand “rapidly” throughout most of Gaza and that Palestinians would “have to evacuate the fighting zones”.
He did not say where Palestinians were supposed to go.
The war between Israel and Hamas began when Hamas-led militants invaded Israel on 7 October 2023, killing around 1,200 people and taking 251 hostage.
Some 59 hostages are still being held in Gaza, with 24 still believed to be alive.
The ensuing Israeli offensive has killed more than 50,000 Palestinians, according to Gaza’s Hamas-run health ministry.
It does not distinguish between civilians and combatants in its count, but has previously said more than half of those killed in the conflict are women and children.