Pound sterling drops against the euro and dollar as Boris Johnson quits as Foreign Secretary
Boris Johnson’s decision to step down comes after David Davis resigned from his role as head of Brexit negotiations
THE pound dropped against the dollar and the euro following Boris Johnson's resignation from the Cabinet.
He resigned as Foreign Secretary just hours after Theresa May lost Brexit Secretary David Davis.
Sterling slid by 0.75 per cent to $1.32 against the US dollar in the wake of the news.
Against the euro, it was also down by more than 0.50 per cent per cent to €1.1282.
Connor Campbell, financial analyst from Spreadex, said: "While the resignation of Brexit Secretary David Davis actually ended up sending the pound higher, those gains were quickly eroded as Boris Johnson pulled his own disappearing act.
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"With that being two Cabinet resignations in less than 24 hours, the pound began to fret about the chances of a formal challenge to Theresa May’s leadership from inside the Tory party, and the subsequent potential for another general election.
"To be fair to sterling, however, it avoided falling off a cliff like it might well have done, instead producing a more measured reaction to the day’s twists and turns."
The resignation of Mr Johnson as Foreign Secretary could deliver a death blow to Mrs May's struggling Government, with MPs lining up to launch an official leadership challenge to the Prime Minister.
The double blow - coming after Mrs May thought she'd managed to unite the Cabinet around her Brexit strategy - is the biggest threat to the PM since she took power.
The pound tends to jump or drop on any rhetoric around the nature of Brexit and any data providing insight into the state of the economy.
Connor Campbell added: "The big question now is, how much of a domino-effect will this Davis/Johnson double have in the coming days (and indeed hours), and whether or not May has the support to climb onto her job."
The rate has remained relatively stable for the past two months following a more volatile period earlier in 2018.
It still remains roughly down 11 per cent against the dollar since the EU referendum.
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