(Sharecast News) - The pound dropped sharply on Tuesday, after reports that one of the government's most senior legal experts had resigned over Downing Street proposals to challenge parts of the 2019 Brexit Withdrawal Agreement.
According to the Financial Times, Sir Jonathan Jones - Treasury solicitor and permanent secretary of the Government Legal Department - quit after plans were put forward by prime minister Boris Johnson that would enable the UK to backtrack on parts of the Withdrawal Agreement, including the Northern Ireland protocol.
The government has said that any new legislation would only used if trade talks with the EU failed.
But citing two unnamed officials "with knowledge of the situation", the FT said Jones was "very unhappy" about the plans. The Guardian reported that a spokesman for attorney general's office had confirmed the resignation, but did not provide further comment.
With trade talks between the UK and EU resuming on Tuesday, news of Jones's unsettled the pound. It dropped to its lowest point against the dollar since 25 August, down 0.93% at $1.3044 at 1230 BST, while against the euro it was off 0.84% at €1.1051.
Neil Wilson, chief market analyst at Markets.com, said: "While we should caution that [Jones's resignation] indicates disharmony, it is also possible an overreaction by the market to a negative headline and does not necessarily make a deal with the EU less likely that it was before.
"Nonetheless, it highlights the brinkmanship pursued by Johnson's government in the talks - even suggesting that Britain could unilaterally rewrite the Withdrawal Agreement has raised the EU's hackles and clearly raises the stakes.
"Expect more negative headlines, more risk and more volatility."
Jones is the sixth senior Whitehall civil servant to resign this year. Neither Downing Street nor the Cabinet Office have commented on Jones's reported departure.
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