The pound was up in early Asia trading as investors confidence was boosted by the expectation that more of Prime Minister Liz Truss's package of unfunded tax cuts may be reversed.
The pound increased by as much as 0.6% to $1.1243. In a BBC interview on Sunday, Jeremy Hunt, a newly appointed Chancellor of the Exchequer, said nothing was off the table when it came to abandoning more of the premier's planned measures.
Peter Kinsella, global head of FX strategy at Union Bancaire Privee UBP SA in London, said that it indicates that they are moving back to some degree of fiscal probity and employing a more prudent fiscal outlook. He said that the steps taken by the government should be enough to stabilize the currency before the announcement of the medium-term fiscal plan at the end of the month.
The pound has swathed as rumors about a possible swathe of U-turns from the Treasury took hold. It surged as much as 2.5% against the dollar on Thursday as reports of widespread changes trickled in before falling by 1.4% on Friday after a lackluster press conference from Truss that contained little new.
The pound remains vulnerable. The end of the Bank of England's emergency bond-buying program on Friday could cause further ructions in the gilt market, with uncertainty over the extent to which liability-driven investment funds have recovered from the spike in bond yields.
While volatile, the currency has recovered near to levels seen before the government unveiled its fiscal plans on Sept. 23, which analysts attribute in part to the BOE interventions in the bond market that have staved off the risk of broader financial instability.