Summary:

• GBP falls to lowest level of the day after more Brexit developments
• Foreign secretary Boris Johnson follows David Davis in resigning
• GBPUSD back below 1.33 after rejecting fib level

There’s been some swift downside seen in the pound in recent trade with the currency coming under pressure after another key politician has resigned. Foreign secretary Boris Johnson has followed in the footsteps of Brexit secretary David Davis in stepping down from his role in a move that could well pave the way for a leadership challenge to PM May.

 GBP has handed back its earlier gains following the resignation of Foreign secretary Boris Johnson. Source: xStation 

The timing of the announcements is particularly interesting with reports from Friday that Johnson has urged fellow cabinet members to rally around the PM following the outlining of the latest Brexit proposals which showed a marked shift in stance towards a softer outcome. The pound has fallen below the 1.33 handle against the US dollar in the immediate reaction, after earlier trading close to a 1-month high. 

 GBPUSD dropped over 100 pips in reaction to the news of the resignation. Source: xStation

Johnson’s resignation is a significant event from a market standpoint and something of a shock marking a pretty remarkable U-turn after seemingly backing the proposals made at Chequers. It could now be seen to pave the way for more to follow and means that Davis’s decision to stand down isn’t an isolated event and the chances of a challenge to May’s leadership have now increased markedly.    

 

 GBPUSD retraced to the 23.6% fib earlier today but has been met with some selling after the latest political developments. Source: xStation

The drop in the pound is helping UK stocks with the UK100 surging to its highest level of the day in the last hour.