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Analysts at TD Secutiresi,  (TDS), explained that after the apparent “consensus” of Friday’s Chequers Brexit agreement, the UK cabinet has seen a raft of resignations in the last 24 hours, with Brexit secretary David Davis resigning overnight alongside junior minister Steve Baker, and Foreign Secretary Boris Johnson resigning this afternoon.

Key Quotes:

“Theresa May appointed Dominic Raab as Davis’ replacement this morning, and a new Foreign Secretary is yet to be announced. The situation remains highly fluid, with further resignations likely in the coming days.”

“We see no major implications for the immediate near-term Brexit negotiations, as none of the resigned Cabinet members–despite their titles–were heavily involved in negotiations. However, the weekend’s events do raise further questions about the political landscape for the rest of the year. This includes higher odds of a leadership challenge to PM May, a general election, and/or a Hard Brexit outcome. We discuss various risks in this piece.”

“FX: The UK’s uncertain political landscape leaves sterling subject to large binary risks. For now, we think cable will ultimately continue to climb the wall of worry if our base case for May to hold on is realized as today’s sell-off looks overdone. We do not have a high degree of conviction, however, and a daily close below 1.3205 would see us revert to the sidelines.”

“Rates: Short sterling strip continues to remain vulnerable to the incoming political news. Strategically, we still think that the Gilt yields will be driven by the rhetoric from the BoE. We still continue to hold a bearish bias for the rates in the near term.”