Pound wobbles as resignations threaten Brexit deal
Liam Sheasby, News Editor
11 Jul 2018, 12:01 p.m.
Sterling registered its largest daily loss for three and a half weeks against the US Dollar on Monday in the two hours following Boris Johnson's surprise resignation as Foreign Secretary.
The move came less than 24 hours after David Davis, the Brexit Secretary, also resigned his position and means that eight MPs - six from the front bench - have resigned from Prime Minister Theresa May's cabinet in the last 12 months.
The decisions came after a weekend cabinet meeting at Chequers to decide what sort of Brexit the Conservatives want once and for all - to ensure unity before the exit deadline next March. Davis made his decision shortly before midnight on Sunday saying it was a "compromise too far".
The price of gold went up by £8 per ounce following the news - a rise driven by the weaker Pound and investor fears that no Brexit deal will be reached now that the two chief coordinators with the EU for the past two years of negotiations have quit.
Despite the Pound slightly recovering yesterday and today, investors are still concerned that Boris Johnson may challenge Theresa May for the leadership of the Conservative Party and the UK government. A contest would likely lead to a general election, all of which would eat into the remaining time for Brexit negotiations. This risks putting investors off the UK markets and the Pound, in the same way that the fractured and indecisive Italian government earlier in the year led to the Euro hitting a six month low against the Dollar.