The pound rose and government borrowing costs fell on Monday, as investors welcomed the announcement by Chancellor Jeremy Hunt of the reversal of most of the mini-budget tax measures.
Sterling extended gains against the dollar, and is trading at around $1.14.
The news also saw the interest rate – or yield – on UK government bonds fall, making government borrowing less expensive.
However, analysts said tough decisions remained ahead on government spending.
An update to the government’s mini-budget had been scheduled for 31 October, but Mr Hunt brought forward many billions of pounds worth of tax and spending measures in a bid to reassure the markets.
The changes will see a planned cut in income tax scrapped, while a cap on energy bills that had been due to last two years is now only guaranteed until April next year, when it will be reviewed.