Sterling fell against a strengthening dollar today after the British government cancelled only part of its fiscal programme, disappointing investors who had expected a bigger U-turn.

The pound was last at $1.116, down 1.5% on the day after Prime Minister Liz Truss said Britain's corporation tax will rise to 25%, reversing an earlier plan to freeze it at 19%.

Earlier in the day, Truss fired her finance minister Kwasi Kwarteng , whose fiscal plan announced in late September triggered turmoil in financial markets.

The move sent yields on British government bonds soaring and the pound to a record low of $1.0327.

"Undertaking a U-turn that is forced doesn't really give the impression that Liz Truss is driving forward with a credible policy plan," said Richard McGuire, head of rates strategy at Rabobank.

"I don't see how that press conference will have done much to shore up the appeal of UK PLC to foreign investors," he said.

"You see that with the weakness of sterling. I would expect gilts and the pound to remain under pressure going forward," he added.

Reports of a possible U-turn yesterday had caused the pound to rise 2% on that day, when the dollar also turned lower before rebounding today.

The pound's moves were more muted against the euro, which was last up 0.9% at 87 pence, having shed 1.3% the previous day.

"I think the market had built up expectations overnight that almost all of the mini-budget was going to be cancelled, hence when a U-turn only on corporation tax was announced it came as a bit of a disappointment," said Michael Brown, head of market intelligence at Caxton.

"A bit of 'buy the rumour, sell the fact' is probably in the mix too."

The yield on British government bonds, or gilts, rose today, having fallen a day before.

That is expected to increase the focus on the Bank of England, whose emergency bond buying programme is due to end today.