Sterling jumps to $1.35 after report suggests Boris Johnson may resign

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British Foreign Secretary Boris Johnson speaks ahead of Prime Minister Theresa May during her last campaign visit at the National Conference Centre on June 7, 2017 in Solihull, United Kingdom.

The British pound leaped half a cent to $1.35 on a report that British Foreign Secretary Boris Johnson “will resign before the weekend” if Prime Minister Theresa May opposes his demands on Brexit.

Sterling slid nearly 1 percent on Monday after Bank of England Governor Mark Carney said that any interest rate rises would be “gradual” and “limited”. It bounced back Tuesday afternoon after the U.K.’s Telegraph newspaper reported that Johnson could resign before the weekend if Theresa May adopts a “Swiss-style” Brexit arrangement in her speech in Florence on Friday.

Stephen Gallo, European head of FX strategy at BMO Capital Markets, told CNBC via email: “His departure may mean a higher chance of a ‘soft Brexit’ which the FX market will treat as GBP-positive. However, his departure could also lead to a wider rift within the CON (ruling-Conservative) Party itself.”