Sterling hammered by Jo Johnson resignation

Joseph Trevisani FXStreet

The British Pound fell sharply against the dollar and the euro following the resignation of Conservative MP Jo Johnson over the pending Brexit deal, underlining the difficulty Prime Minister Theresa May will have in selling the agreement to her own party.

The sterling which had traded as high as 1.3072 against the US Dollar slipped to 1.2969 at the New York close and to 0.8742 versus the euro having been as high as 0.8692, just two points above Thursday's six month sterling top of 0.8682.

Mr. Johnson the brother of former foreign secretary Boris Johnson whose resignation on July 9th sent the sterling to a 13 month low in August at 1.2662, said that there needs to a public vote on the terms of the UK's departure from the European Union.

Mr. Johnson was against the UK leaving the EU during the campaign two years ago and served as Minister for State Transport. He said the country was "on the brink of the greatest crisis" since the second world war, and that Ms May's settlement left the UK with a choice of "vassalage or chaos." The referendum, he said, should have three choices, endorse Ms May's deal, leave without a deal, or remain in the EU. A second referendum on the departure is anathema to the supporters of Brexit.

Boris Johnson was one of the most prominent and influential of the Brexit advocates.

Ms May had hoped to convince her cabinet this weekend to back the deal but there appears to be dissension over the terms of the customs union with the EU that is necessary to avoid a trade barrier at the Northern Ireland border with Ireland to the south.

GBP/USD

Author

Joseph Trevisani

FXStreet

Joseph Trevisani began his thirty-year career in the financial markets at Credit Suisse in New York and Singapore where he worked for 12 years as an interbank currency trader and trading desk manager.

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