Chancellor and Bank of England are urged to prop up the pound after mortgage deals are pulled

KWASI KWARTENG and the Bank of England came under growing pressure today to take more dramatic action to prop up the pound, as homeowners faced a steep hike in borrowing rates.

- David Bond and Simon English

Although the pound rallied this morning, hitting $1.08 in early trading, some senior Conservatives want the Chancellor to go further to calm financial markets. Last night some of the country's biggest lenders pulled mortgage deals following sterling's fall to an all-time low against the dollar yesterday.

At the same time the Bank is coming under pressure to hold an emergency meeting where they could push interest rates even higher to try to restore confidence in the UK economy. Homeowners are already facing a painful rise in their monthly mortgage payments as banks and building societies reprice their rates to reflect last week's rise in the Bank of England's base rate to 2.25 per cent.