Breaking: GBP/USD bounces above 1.30 as Sajid Javid resigns as Chancellor, Rishi Sunak to replace him

Yohay Elam FXStreet

UK Chancellor of the Exchequer Sajid Javid has resigned from his post amid Prime Minister Boris Johnson's cabinet reshuffle. Javid has been in his post since July.

Javid and Johnson were reportedly at odds over the nomination and firing of special advisers (spads) in the chancellory. Johnson insisted that Javid fire all spads and that the PM's office would choose new ones. The changes in government had been touted as minimal, but the stepping down of the second in line in the government is meaningful and investors are taking note.

A spokesman for Javid said, according to The Guardian:

[Javid] has turned down the job of chancellor of the exchequer.

The prime minister said he had to fire all his special advisers and replace them with Number 10 special advisers to make it one team.

The chancellor said no self-respecting minister would accept those terms.

Javid is seen as a capable set of hands. According to reporters in London, Rishi Sunak, chief secretary to the Treasury, will assume the post.

Sunka may enact a looser monetary policy, in line with Johnson's promises to spend on infrastructure. That would allow the Bank of England to step back with monetary easing, thus supporting the pound.

See: GBP/USD Forecast: Boris bulldozes Javid to make way for infrastructure spending, levels to watch

GBP/USD has dropped below 1.2970, paring previous gains before paring some of its losses. However, after the news of Sunak's nomination, pound/dollar eventually advanced, topping 1.30.

GBPUSD one minute chart Sunk replaces Javid as Chancellor

Pound/dollar has been reacting to speculation about Brexit, coronavirus headlines, and testimonies by central bankers earlier this week.

Author

Yohay Elam

FXStreet

Yohay is in Forex since 2008 when he founded Forex Crunch, a blog crafted in his free time that turned into a fully-fledged currency website later sold to Finixio.

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