Pound rises ahead of expected Johnson resignation

The pound rose against the dollar on Thursday ahead of an expected announcement from the Prime Minister that he will resign.

Sterling ticked above $1.20 as details also began to emerge of a reshuffle to replace a stream of ministers who have resigned in the past 48 hours.

Boris Johnson is set to make a statement that he intends to step down.

XTB chief market analyst Walid Koudmani said it "will bring some relief to UK investors" and quell uncertainty.

While the pound rose, it is still remains 4% lower than it was a month ago when it was trading at around $1.25.

Mr Koudmani said: "Make no mistake the [pound] remains severely weak due to the dire state of the UK economy which is underperforming its peers, likely to enter into a recession while the Bank of England refuses to hike interest rates aggressively to deal with the escalating inflation."

Greg Clark, the former business minister, has been named as Levelling Up Secretary to replace Michael Gove who was sacked by Mr Johnson on Wednesday evening.

While Mr Johnson is expected to say he will remain in place until later this year, some Conservatives MPs have called for him to go sooner.

Business Secretary Kwasi Kwarteng tweeted: "We now need a new leader as soon as practicable. Someone who can rebuild trust, heal the country and set out a new, sensible and consistent economic approach to help families."

Kitty Ussher, chief economist at the Institute of Directors, the UK employers' group, said: "What business hates most is uncertainty and instability, which heightens the sense of external risk. Having said that, we recognise that this is an issue for the Conservative Party to resolve.

"Going forwards, the priority must be to give businesses the confidence to invest in our collective economic future."