The pound has surged by more than 2% against the dollar amid rumours that Downing Street is drawing up plans for a major U-turn on Kwasi Kwarteng’s 43bn tax cuts.

The pound has surged 1.4% to $1.1259 against the dollar.

Reports suggested Liz Truss plans to keep corporation tax at the existing level were being reconsidered. Tory MPs and the Labour party have publicly urged the prime minister to raise tax on firms to support households with rising food and energy costs.

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The government had planned to keep that rate at 19% instead of allowing it to rise to 25% next year.

Negotiations also included potential changes to the dividend tax, according to Sky News, which said Conservative Party members of parliament were making their discomfort over the mini-budget "very clear."

The benchmark 10-year gilt yield fell by almost 0.4 percentage points in a massive move in UK bonds as relief swept markets.

Officials at 10 Downing Street and the Treasury are drafting options for Truss but no final decision has been taken on any reversal.

Officially there is no plan for any U-turn, with the prime minister’s spokesperson saying there will be no further changes.

“The position has not changed,” the spokesman said.

In Washington DC, Kwasi Kwarteng insisted “our position has not changed” as he faced pressure to abandon more elements of the mini-budget which has caused market turmoil.

The chancellor said he was “totally focused” on delivering the tax-cutting plans, which are aimed at increasing UK economic growth.

Yields, which rise as prices fall, had surged as high as 5.1% on Wednesday, matching the levels which led to the Bank of England's initial intervention after the market was shaken by the mini-budget announcement.

Officials stepped in two weeks ago after Kwarteng’s mini-budget sent markets into chaos amid concerns over higher borrowing costs.

Read more: Mini-budget was 'straw that broke the camel's back'

The Bank launched a bond-buying programme, for up to £65bn of long-term gilts, which will stop completely on Friday.

As part of the programme, the Bank bought around £4.35bn of bonds on Wednesday in an increased effort to help soothe the markets.

Investors had previously been shaken by governor Andrew Bailey’s firm message on Tuesday that the central bank would not extend the plan beyond the end of this week.

Watch: Foreign secretary fails to rule out U-turn on corporation tax