The pound moved higher in early Asia trade after the UK Government made a series of U-turns as it abandoned tax cutting policies.
Sterling gained around 0.5% to trade above $1.12 in Monday morning trading, according to the BBC.
On Friday, Prime Minister Liz Truss sacked Kwasi Kwarteng as chancellor and said the mini-budget "went further and faster than markets were expecting".
New Chancellor Jeremy Hunt warned over the weekend that there would be tax rises and savings in public spending.
The moves came as international financial markets resumed trading for the first time since the new chancellor's comments.
Warning of fresh interest rate hike
Meanwhile, the governor of the Bank of England has warned interest rates may need to rise by more than previously expected.
Speaking in Washington, Andrew Bailey said "inflationary pressures" meant a "stronger response" could be needed from the Bank than thought in August.
The next rate rise decision is on 3 November, days after the government lays out its economic plans.
Mr Bailey described his discussions with Mr Hunt as a "meeting of minds".
The warning comes just weeks after the Bank hiked interest rates by 0.5% to 2.25% on 22 September.
Prior to Mr Bailey's comments, the markets were expecting a rise of between 0.75% and 1% when the Bank's Monetary Policy Committee makes its next rates decision in November.
Inflation is set to rise above double digits once again when the Office for National Statistics publishes its figures for September on Wednesday.
The Bank of England said in its most recent forecasts, made in the August monetary policy report, that inflation would hit 10.1% in September.
Recession to last until the summer
Britain will be in recession until next summer, according to an influential forecaster, as Whitehall officials battle to restore the UK’s credibility in global markets after weeks of turmoil.
The EY Item Club now expects gross domestic product to contract by 0.3% next year, down from a previous estimate of 1% growth, although the risk of a severe downturn has been mitigated by the government’s intervention on energy bills.
Hywel Ball, UK chairman of EY, told The Times: “Weak UK and global economic growth, the rising cost of capital goods and a world of higher-than-expected interest rates risk holding back the pace at which business investment will grow.”
FTSE 100
The UK's top share index, the FTSE 100, was up 32-points at 6,891 shortly after opening this morning, following Friday's eight-point gain.
Brent crude futures were ahead 0.31% at $92.37 a barrel.
Companies reporting today
- Rio Tinto - Q3 Operations Review