It was a tumultuous day in UK politics yesterday as two key members of Prime Minister, Theresa May's cabinet resigned over the government's intended Brexit strategy, hammered out at Chequers on Friday. First to go was Brexit Secretary, David Davis who’s exit was announced on Sunday night. Davis’ letter of resignation highlighted that “the general direction of policy will leave us in at best a weak negotiating position, and possibly an inescapable one.” Comments from Davis after his departure were conciliatory in tone about Theresa May confirming that he would not be looking to make a leadership challenge and that she was a good PM. Replacing Davis will be Dominic Raab who has been promoted from housing minister. Next to go and the one that really rattled the pound was the departure of Foreign Secretary, Boris Johnson. Rumours started to circulate at lunchtime that he may be leaving and around 3pm it was confirmed he had quit. GBP/USD lost 150 pips by 5pm, bottoming out at 1.32 as markets weighed up the chances he would make a bid for power throwing the Tory party into turmoil. It has since recovered as it appears Theresa May has seen off a leadership challenge for now however her position is more precarious than ever (and that’s saying something). Johnsons resignation letter, stated that the “Brexit dream is dying, suffocated by needless self-doubt.” In a barbed response by May of Johnsons resignation, she said, “I am sorry - and a little surprised - to receive it after the productive discussions we had at Chequers on Friday.” Health Secretary, Jeremy Hunt has been drafted in as replacement for Johnson as Foreign Secretary.
Politics is likely to dominate news for the time being however there is some data out today from the UK with the first monthly print of GDP. This will be released each month as a gauge for the month before last, ie this July announcement is for Mays numbers. We also have UK Manufacturing Production at the same time which is expected to show 1% growth m/m. Cable sits around 1.3280.