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Pound Weakens As Johnson Likely To Win Tory Leadership Contest

The pound drifted lower against its major counterparts in the European session on Monday, as results of the Tory leadership contest will be announced tomorrow, with Boris Johnson tipped to be the successor to Theresa May.

As voting is set to close, Alan Duncan has resigned as a Foreign Office minister in protest against a possible Johnson victory.

Opposition to the prospect of a no-deal Brexit under the leadership of Johnson was the reason behind ministerial resignation.

Chancellor Philip Hammond and Justice Secretary David Gauke are expected to leave their post, if Boris Johnson becomes Prime Minister.

Johnson had pledged to take the U.K. out of the European Union by October 31 deadline when he steps into No. 10.

Survey data from IHS Markit showed that British households' expectations towards future finances remained positive in July.

The headline household finance index rose for the second straight month in July, to 44.3 from 43.9 in June. The score signaled the weakest level of pessimism among households towards their finances since January.

The currency traded mixed against its major counterparts in the Asian session. While it rose against the euro and the yen, it was steady against the greenback and the franc.

The pound dropped to a 4-day low of 134.41 against the yen, from a 6-day high of 135.09 it touched at 9:30 pm ET. The pound is seen finding support around the 131.05 region.

The pound depreciated to 4-day low of 1.2462 against the dollar from Friday's closing value of 1.2498. The pound is likely to find support around the 1.22 area.

The U.K. currency fell to 1.2234 against the franc, a level unseen since August 2017. Next key support for the pound is likely seen around the 1.21 level.

The pound touched the key 0.90 level against the euro, marking a 4-day low. This follows a weekly high of 0.8955 it set at 5:15 pm ET. On the downside, 0.92 is possibly seen as the next support level for the pound.

Looking ahead, Canada wholesale sales for May are due at 8:30 am ET.

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