Sterling and UK government bonds jumped on Thursday as Liz Truss’s government came under mounting pressure from Tory MPs and the IMF to reverse or alter the unfunded tax cut plans that have shaken markets.

The gains came a day after the Bank of England soothed market jitters with ￡4.4bn of bond purchases as part of an emergency intervention due to end on Friday and as the head of the IMF told the UK “not to prolong the pain” of its unfunded tax cuts.

Sterling rose 1.5 per cent against the dollar to $1.1262, while the 30-year gilt yield fell by 0.43 percentage points to 4.46 per cent, signalling a strong rise in prices. The government’s 30-year borrowing costs had soared above 5 per cent on Wednesday, close to the level that prompted the BoE to step into markets with an offer to buy up to ￡65bn of long-term gilts two weeks ago.