The pound jumps against the dollar after Liz Truss resigns as prime minister, but more volatility could be in store for markets as political and economic risks linger

• The pound rose against the US dollar Thursday as Liz Truss resigned as UK prime minister.
• Truss' 45 days in office were marked by turmoil in financial markets over her government's mini-budget.

The pound climbed against the dollar Thursday after Liz Truss resigned as the UK's prime minister following weeks of turmoil in the financial markets in reaction to her government's mini-budget. But analysts said to expect further volatility as the country works out its next moves on the leadership front.

Pound sterling rose as much as 1.1% to $1.1337 before paring the rise to 0.8%. In the bond market, the yield on the 30-year gilt fell by 10 basis points to 3.82% as prices rose. On the shorter end, the 2-year gilt yield slipped 2 basis points to 3.48%.

['We] set out a vision for a low tax high growth economy that would take advantage of the freedoms of Brexit," Truss said Thursday. "I recognize, though, given the situation I cannot deliver the mandate on which I was elected by the Conservative Party."

She resigned as the UK's prime minister after just six weeks in the role. Her 45-day tenure — the shortest term in UK history — was roiled by her government's initial £45 billion ($50.8 billion) economic growth plan that included unfunded tax cuts.

The plan sent borrowing costs, including those for mortgages, soaring, prompting emergency bond buying by the Bank of England and eventually a series of policy reversals by Truss.

"The pound is trading higher, attempting to climb back up its 2-week highs logged earlier this week, as investors cheer Truss' departure and the potential for a more economically savvy, market-friendly leader," said Victoria Scholar, head of investment at Interactive Investors, in a note.

A new leader of the Conservative Party will be named by next week, Truss said.

"There will be a relief rally in markets now that Truss has confirmed her departure - it will be short-lived as political upheaval remains," Nigel Green, CEO of independent financial advisory deVere Group, said in a note.

"Currently, there's 10.1% inflation with a stranglehold over households and business, and there is no functioning government. To investors, the UK looks ungovernable, and its economy resembles that of an emerging market, not a G7 nation," he wrote.

The UK large-cap FTSE 100 index ended up by 0.3% after turning lower on pound strength.

"Although Truss was brought in to usher in an era of growth and 'trickle-down economics', her strong pro-growth policy was poorly timed, sending the UK bond markets into a sharp sell-off as her policies fanned the flames of surging inflation," said Giles Coghlan, chief market analyst at HYCM.

He said Truss' departure will likely be "mildly GBP positive" depending on her successor.