News that Boris Johnson will resign before the weekend if Theresa May goes against his Brexit demands has caused a stir in the markets with the pound popping higher and the FTSE pulling back from its highest level of the day. PM May will deliver a keenly anticipated speech in Florence on Friday where she is expected to provide more details on her Brexit goals. The latest news is a further ratcheting up of the pressure on the PM from Boris following an article in the weekend press from the foreign secretary which reaffirmed his opposition to a “soft” Brexit.
The rise in sterling since the news is modest compared to recent rallies but it shows nonetheless that the markets are closely watching the latest political developments with a keen eye. Recently economic data and monetary policy have usurped politics in driving the pound, but the latest news is a timely reminder that the political situation can quickly become front and centre once more after what has been, since the Brexit vote at least, a relatively prolonged period on the back-burner.