UK Government Crisis Deepens As Boris Johnson Resigns, Pound Tumbles

The UK government crisis that was unleashed on PM Theresa May's cabinet last night when Brexit minister David Davis resigned, has just escalated following the resignation of foreign minister Boris Johnson. While BoJo was speculated to be unhappy with May's deal, many suggested that he was willing to fall in line; however events over the past 24 hours changed his mind.

Theresa May promptly accepted Johnson's resignation with the following brief statement:

"This afternoon, the Prime Minister accepted the resignation of Boris Johnson as Foreign Secretary. His replacement will be announced shortly. The Prime Minister thanks Boris for his work'"

Johnson's resignation increases the chances that May will now face a leadership challenge over her Brexit policy.

As Bloomberg adds, "resignations traditionally unleash leadership challenges in the U.K. Davis’s prompted pro-Brexit lawmakers to demand May rip up her proposals, but they didn’t call for her to go. That’s partly because they can’t be sure they have the numbers needed to be sure of defeating her. But Johnson’s exit could embolden others."

As a reminder, late on Friday, May pushed her Cabinet late on Friday into a Brexit plan that many had misgivings about.

Initially, it looked like she had managed to get away with pushing for the Brexit that buinesses wanted - as soft as possible with close ties to the bloc. Then everything changes when Brexit minister David Davis resigned and took his deputy with him. Now Boris has joined them.

As Bloomberg 's Tim Ross notes, "Johnson has been worried for months that May is taking too long to negotiate Brexit. She told him to trust her, but the direction of her policy -- towards an ever softer split -- meant that he always wanted proof that he could."

It looks like the plan she unveiled last week at Chequers eventually proved too much. And perhaps he was encouraged to jump by the fact that his colleague David Davis did so first.

More importantly, now that the most prominent pro-Brexit names have fled, May's support appears to be crumbling among the conservatives.

At least one person was delighted by the latest news: the original Brexiteer, Nigel Farage, the former U.K. Independence Party Leader, who congratulated Johnson on quitting, adding that now is the time to topple Theresa May:

Meanwhile, as Reuters' Jamie McGeever writes, the "odds of 2018 UK election slashed to 6/4 from 5/1, and Theresa May now 2/1 to go this week"

As for who may replace Theresa May, according to the latest YouGov results, Jacob Rees Mogg is the most likely replacement, with Sajid Javid and Ruth Davidson came joint second.

As a result of the ongoing chaos, pound has slid, erasing all overnight gains amid fears that Theresa May will now see a vote of no confidence, one which could result in a new government.  

And an even bigger drop in cable: