Sterling soared to six-week highs today, as Britain's new Prime Minister Rishi Sunak held his first cabinet meeting and a decision to delay the announcement of a plan to repair the country's public finances.

The UK's Chancellor Jeremy Hunt said the plan was postponed until November 17 to allow it to reflect the "most accurate possible economic forecast".

The fiscal statement was previously scheduled for 31 October. Mr Hunt said it would now be a "full autumn statement" that will show debt falling over the medium term.

Rishi Sunak took power this week with a promise to fix the mistakes of his predecessor and stabilise the economy, warning Britain faced a "profound economic crisis".

The pound was last up 1.16% against the dollar at $1.1601, and was 0.41% higher against the euro at 86.500 pence per euro.

"Things are certainly starting to look a lot more constructive for the pound," said Michael Brown, head of market intelligence at Caxton.

"PM Sunak coming into office appears to have restored fiscal credibility with the market, removing a large chunk of the risk premium that was previously associated with UK assets," said Brown.

Former prime minister Liz Truss resigned last week following major U-turns on her fiscal plan.

The plan had sent UK gilt markets into chaos and saw the value of the pound plummet to a record low of $1.0327 against the dollar on September 26.

The currency has regained almost 13% in value since then, but is still 14% down so far this year against the dollar.

According to Caxton's Brown, a broad softening in the dollar as the market anticipates a more dovish Federal Reserve next week should continue to underpin the pound for now.

For Chris Turner, head of FX Strategy at ING, $1.1500 is a big level for sterling, and a sustained break above that level could see the correction extend to $1.1750.

"But such a correction would more likely be driven by a global re-assessment of risk ($ negative) than a further re-rating of UK prospects," Turner wrote in a note.

Despite the pound's recovery, Britain's economic outlook still presents a major headwind.

Data last week showed inflation rising back to a 40-year high in a new blow for households grappling with a cost-of-living crisis and compounding the challenge faced by the Bank of England, which is tasked with bringing inflation back to its 2% target.

Investors today were pricing in a 63% chance of a 75 basis point hike at the next Bank of England meeting scheduled for Nov 3, and a 37% chance of a full percentage point increase - a move that was previously fully priced in after Truss's mini-budget announcement in late September.