Pound slides as more Tory MPs resign

The pound has gotten off on the back foot at the start of the new week with the currency sliding across the board as politics continue to weigh on sentiment. Sir Alan Duncan, the foreign office minister has stepped down and there could well be more to come as it seems opponents of Boris Johnson are quite literally resigning themselves to the fact that he is set to become the next PM. 

In a strong indication of what they expect is to come, two Tory MPs have already announced they will step down if Boris Johnson wins the leadership contest with Chancellor Philip Hammond and Justice Secretary David Gauke both going public yesterday with their resignations. Boris’s intention to deliver Brexit by the 31st October deadline even if that means leaving without a deal is proving very divisive and will likely mean that he will fill the new cabinet with yes-men who are hard Brexiteers. 

The deadline for voting amongst Conservative members is 5PM this afternoon with the result expected tomorrow. It would come as a huge surprise for the markets if Boris Johnson isn’t the winner of the contest and while his more hardline approach to Brexit is seen as less constructive for the pound, there’s already been quite a lot of bad news baked in. 

The Pound dropped for an 11th week in a row against the Euro last time out, extending the losing streak which was already the longest on record and sentiment in sterling is getting pretty extreme on the bearish side. The downside risks for the currency are readily apparent, but there is a sense that the current view is a little overly pessimistic given that Boris is more a political opportunist than a deeply ideological supporter of Brexit and therefore could well soften his stance once he is inside number 10.