By Geoffrey Smith
Investing.com -- The U.K. has abandoned plans to cut the top rate of income tax after several high-profile Conservative Party figures came out against the move over the weekend.
"We get it, and we have listened," Chancellor of the Exchequer Kwasi Kwarteng tweeted, sealing the first big u-turn of the new government of Prime Minister Liz Truss. In a statement accompanying the tweet, Kwarteng said that the tax cut - which would have benefited only the country's top earners - "has become a distraction from our overriding mission to tackle the challenges facing our country."
The cut was a relatively small part of the £45 billion ($48 billion) giveaway announced by Kwarteng in his mini-budget two weeks ago, but has triggered a furious political backlash against the Conservatives, and was criticized by - among others - former party kingmaker Michael Gove on Sunday, who said he wouldn't vote for the measure when proposed to parliament.
The pound responded positively to the news, which partly soothed the nerves that Kwarteng's original plans had caused. But it was not clear that the announcement would give it lasting support, given that all of the other tax cuts announced two weeks ago remain in place, and that the government doesn't intend to publish any more detail on how they will be funded until November.
By 02:40 ET (06:40 GMT), Sterling was up 0.2% at $1.1176, having earlier risen as high as $1.1279.