Theresa May - who is set to deliver a major Brexit speech in Florence on Friday - was eventually forced to slap Mr Johnson down, insisting her government was being "driven from the front" after Home Secretary Amber Rudd accused her Cabinet colleague of "backseat driving".
"Boris Johnson is the Foreign Secretary and, as the Prime Minister has said, he is doing a good job".
Johnson is regarded as a hardliner who opposes a Swiss-style Brexit in which the United Kingdom would pay for single-market access, and the Pound's jump reflected the view that with Johnson out of the way May would be freer to push through a market-friendly soft Brexit.
The former Tory leadership hopeful spoke to TV cameras in NY after bumping into them on his return from a jog.
Theresa May would have sacked Boris Johnson under "normal circumstances" following his decision to publish his own personal vision for Brexit, a former Cabinet member has said.
However, within minutes of the report's publication, Johnson was stopped by reporters in NY after returning from a jog and insisted he would not resign, describing the Cabinet as "a nest of singing birds".
And on Tuesday Mrs May added that the Cabinet was "absolutely clear about the destination we are aiming for".
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Unless the Prime Minister changes her strategy for leaving the EU, Johnson will have no choice but to resign from his post, his pals told the Telegraph.
The foreign secretary last Saturday published a 4,000-word blueprint for Brexit which argued that Britain should not pay the European Union for access to the single market and repeated the Leave campaign's inaccurate claim that leaving the European Union would free up £350 million a week.
She also confirmed that Downing Street had not given Mr Johnson's magnum-opus the go-ahead.
The Telegraph claimed that Johnson could resign on Thursday if he is dissatisfied with May's revised Brexit plans.
May and Johnson are both in NY for a meeting of the United Nations.
British bookmaker Ladbroke's (LCL.L) said on Twitter that they were offering 11/4 odds, reflecting a more than 73 percent chance, of Johnson either quitting or being sacked by next Monday.