The pound was moderately bid after Prime Minister Boris Johnson announced a well-telegraphed resignation. However, politics are set to have a limited impact, therefore, EUR/GBP trading below 0.85 looks unsustainable.

Politics not the main concern for the pound

“For now, given the high uncertainty around possible candidates, drawing conclusions about the future implications for the pound is quite premature.”

“We think politics will continue to have a relatively contained FX impact, and lingering downside risks for GBP mean that sub-0.8500 levels in EUR/GBP may prove unsustainable unless we see a material further deterioration in the eurozone’s economic outlook.”