Boris Johnson's resignation has caused the pound to fall this afternoon, as traders digested the increasing government uncertainty.

The foreign secretary's decision to quit the Cabinet saw sterling drop to $1.3261, down 0.64 per cent from the $1.3346 point it had been at when rumours of the his departure gained traction. Against the euro the pound was at €1.1287, down 0.43 per cent over the same period.

The resignation of his Cabinet colleague, former Brexit secretary David Davis, had provoked far less of a response.

However traders may be reacting to the increased chances of a no deal as the possibility of a new leadership challenge grows. Johnson is scheduled to give a press conference at 5pm today.

He has not spoken in public since the Chequers away day.

City A.M. understands Johnson has been caught in a tug-of-war since Friday, between his team – who have been urging him to quit – and Number 10, who see him as the biggest threat to Theresa May's tenuous grip on leadership.

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