Gilts and sterling rallied on Monday after Jeremy Hunt, the new UK chancellor, took a wrecking ball to his predecessor Kwasi Kwarteng’s controversial tax-cutting plans in an effort to mollify financial markets.

The 30-year gilt yield tumbled 0.41 percentage points to 4.37 per cent, reflecting higher prices. The moves reversed the majority of a surge late on Friday after investors decided prime minister Liz Truss had not gone far enough by sacking Kwarteng and ditching an ￡18bn corporation tax cut.

Thirty-year government borrowing costs remain far above the level of about 3.75 per cent seen before last month’s ￡45bn of unfunded tax cuts sent markets into a tailspin and triggered a liquidity crisis for UK pension funds. Shorter-dated gilt yields also fell sharply, while the pound gained 2.2 per cent against the dollar to trade at $1.1418.