Another One Bites The Dust As Boris Johnson Quits
GBP takes a dive as another Brexiteer leaves his office! PM May was quick to accept the resignation of Boris Johnson, one of the more disruptive members of her cabinet. The earlier view was that the more hardliners who leave government, the greater the likelihood of a softer Brexit should be seen as supportive. However, the dynamic has changed now. With 2 big names having departed, fears are mounting that a vote of no confidence in Theresa May will be engaged and the Tory party leadership will be up for contest. Political mayhem resumes!
It has been no secret that Boris Johnson has designs on the top job, so it is clear that these assumptions have hit Sterling after a morning of steady gains which saw 1.3300 tripped on the upside. EUR/GBP has also ramped up on the news, though in both cases, the volatility has been relatively tame in comparison to the moves we have seen in previous episodes.
Activity is likely to be ramped up once the markets get in full swing tomorrow, however the mood on GBP has changed pretty rapidly and at this stage, it is worth highlighting the stronger levels in Cable on the downside from 1.3100 to 1.3050. EUR/GBP may well now put in a stronger test on the 0.8900-20 area we have mentioned a few times now, though sellers are capping ahead of last week's highs at 0.8867 for now. Initial support seen in Cable ahead of 1.3200.