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Brexit Briefing: Pound Buffeted as Report Boris Could Resign is Denied

Brexit Briefing: Pound Buffeted as Report Boris Could Resign is Denied

Martin Essex, MSTA,

Talking Points

- The British Pound jumped by half a cent against the US Dollar on a report that UK Foreign Secretary Boris Johnson will resign before the weekend if UK Prime Minister Theresa May opposes his vision for Brexit.

- However, it then lost some of its gains as Johnson denied it.

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UK Foreign Secretary Boris Johnson will resign before the weekend if Prime Minister Theresa May agrees to pay permanently for access to the EU single market, according to the website of The Daily Telegraph, a newspaper that supports the UK’s ruling Conservative Party and which Johnson contributes to as a columnist.

The report sent the British Pound up half a cent against the US Dollar before an almost immediate denial from the Foreign Secretary himself – known throughout the country simply as “Boris” – pushed it back down again.

Chart: GBP/USD One-Minute Timeframe (September 19, 2017)

Chart by IG

According to the website “Boris Johnson ‘could not live with’ the Swiss-style arrangement for Brexit being considered by Theresa May – and may even resign as Foreign Secretary before the weekend if the Prime Minister pushes ahead with such a plan, a key ally has told The Telegraph.”

It continued: “The Foreign Secretary’s close friends believe he will have no option but to walk out of the Cabinet if the Prime Minister advocates permanently paying for access to the single market.”

Johnson is regarded as a hardliner who opposes a Swiss-style Brexit in which the UK would pay for single-market access, and the Pound’s jump reflected the view that with Johnson out of the way May would be freer to push through a market-friendly soft Brexit.

However, within minutes of the report’s publication, Johnson was stopped by reporters in New York after returning from a jog and insisted he would not resign, describing the Cabinet as “a nest of singing birds”. It was even suggested elsewhere on the internet that the story had been planted by his enemies rather than his friends, although that seems unlikely given his close association with the newspaper.

May has already slapped Johnson down this week for outlining his alternative vision for Brexit in what was seen by some as a preparation for a leadership challenge. She will be giving a high-profile Brexit speech on Friday in the Italian city of Florence, described as an attempt to break the deadlock in the withdrawal negotiations, which were due to resume this week but have now been postponed.

Markets

Upcoming UK/EU Event Risk (September 20, 2017; All Times GMT)

--- Written by Martin Essex, Analyst and Editor

To contact Martin, email him at martin.essex@ig.com

Follow Martin on Twitter @MartinSEssex

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