Pound surges higher ahead of Jeremy Hunt's financial plan reveal

At one point, Sterling jumped to 1.129 US dollars having kicked off more nervously, dipping to 1.122 against the greenback in overnight trading ahead of what many have feared would be a testing day on the markets.

After the Treasury’s announcement of an emergency fiscal statement, markets opened for the first time since the Bank of England ended its government bond-buying scheme, with all eyes on the reaction in gilt trading.

On Friday, the Bank stuck to its guns by ending its emergency gilt-buying programme despite fears it would see a return to volatile market conditions which sparked a damaging sell-off in gilts that left some pension funds on the verge of collapse.

Jeremy Hunt (PA) (Image: PA)

Mr Hunt’s move also comes as speculation grows over whether Liz Truss will continue to be Prime Minister.

Susannah Streeter, senior investment and markets analyst at Hargreaves Lansdown, said: “New Chancellor Jeremy Hunt has the air of a troubleshooting teacher brought in to turn around a failing school and faces his first big presentation test today with an emergency budget plan wheeled out to try and calm financial markets.

“This is all part of his charm offensive to instil confidence in the Government’s ability to be fiscally responsible, but behind him unruly pupils are still scheming.”

She added: “Today’s developments may hold off a fresh assault on government borrowing costs by the bond vigilantes standing by in the UK gilt market, but it could only be a temporary reprieve.

“Trussenomics may have been ripped up and fed to the shredder but the author of the big gamble remains in power, and has the final say on the direction of travel.

“Investors are craving more stability but, given the flip-flopping we’ve had so far in her super-short tenure, economic policy uncertainty remains and that’s likely to be the key driver in the bond markets and on foreign exchange desks.”