File image of Starmer and Reeves. Image licensed as CC BY-NC-ND 2.0.

Pound sterling fell against the euro, dollar and its other G10 peers.

Weakness followed an unscheduled speech by Chancellor Rachel Reeves that confirmed she was ready to raise income taxes and break her party's pre-election manifesto pledge that ruled out such a move.

Speaking at Number 11 Downing Street, Reeves said last year she "fixed the foundations" of the economy at her last Budget, but that since then "the world has thrown even more challenges our way".

Asked about the manifesto promises not to raise income tax, National Insurance or VAT, she said: "As Chancellor, I have to face the world as it is not the world that I want it to be."

Following the announcements, the cost of UK borrowing fell, confirming that t

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