Cable rises back above 1.3000 as traders digest Javid's resignation
Javid's resignation was initially met with skepticism but the pound is gaining as it looks like Johnson is taking back more control
The pound nudged lower initially after UK finance minister Sajid Javid surprisingly resigned amid the cabinet reshuffle, with the unexpected news prompting some questions about the political climate within the government.
However, as the details surface, it looks like Johnson wants to push through with his agenda of boosting infrastructure spending and investments (maybe even some tax cuts?) - which are all certainly positive factors for the pound.
As such, it is reported that Johnson wanted Javid to stay on but Javid had to fire all his advisers instead. And that was what prompted his resignation.
Rumour has it that Rishi Sunak will replace Javid but his appointment comes with a catch, in the sense that there will be special advisers from No. 10 that he has to work with.
It looks like Johnson wants things done his way, no matter the personnel.
In any case, the move higher could also be algos trying to sort out the mess but ultimately from a technical perspective, the break above 1.3000 opens up the path to a recovery in the pound after the drop since the start of the month.
Cable is now trading to session highs of 1.3020 and there is little in the way of a move back towards 1.3050-70 next before we revisit the 1.3100 handle.