Pound rises on talk of mini-budget U-turn

The pound has risen as speculation mounts about a possible U-turn over the mini-budget.

Sterling traded above $1.13 against the dollar on Friday morning, as the chancellor headed home early from the US for urgent talks in Downing Street.

The currency hit a record low of $1.03 in September after markets reacted badly to Kwasi Kwarteng's mini-budget.

In it he promised billions of pounds of tax cuts but did not explain how he would fund them.

Government borrowing costs have also fallen, after surging to worrying levels in the days after the mini-budget.

The Bank of England has been buying government bonds to try to stabilise their price and prevent a sell-off that could put some pension funds at risk of collapse.

However, that support is due to come to an end on Friday.

The government has already U-turned on its plan to scrap the top rate of income tax, but many Conservative MPs think a further change of plan is imminent.