Pound rallies with U.K. and EU set to announce Brexit trade deal

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Pound rallies with U.K. and EU set to announce Brexit trade deal


The pound continued its rally early on Thursday as investors expected a Brexit trade deal to be announced within hours.

After months of protracted negotiations and several missed deadlines today could finally be the day the U.K. and the EU strike a deal on their future trading relationship.

Sterling
GBPUSD,
+0.71%

marched higher in early trading, rising 0.7% against the dollar to $1.3583, closing in on the two-and-a-half-year highs of $1.3625 the currency hit last week.

Read: Is the stock market open Christmas Eve? Holiday and New Year’s trading hours

British Prime Minister Boris Johnson and European Commission President Ursula von der Leyen were set to speak by phone shortly, with a deal due to be announced later on, according to various reports. Ireland’s foreign minister, Simon Coveney, said there was a “last-minute hitch” relating to language over fishing rights but expected an announcement later on Thursday. “I had hoped to be talking to you this morning in parallel with big announcements happening in both London and Brussels, but we still expect those later on today,” he reportedly told Ireland’s RTÉ radio. The deal would still need to be ratified ahead of the year-end deadline.

European stocks failed to significantly build on Wednesday’s gains but the prospect of an agreement brought a sense of relief to markets ahead of Christmas.

The pan-European Stoxx 600
SXXP,
+0.18%

was 0.2% up, while the French CAC
PX1,
-0.10%

edged 0.1% lower and the U.K.’s FTSE 100
UKX,
+0.10%

was 0.1% up at the end of a shortened trading day. The domestically-exposed FTSE 250 was the top performer, rising 1.2%, as U.K.-focused stocks enjoyed gains on hopes for a Brexit deal. The German DAX
DAX,
+1.26%

was closed for the holidays. U.S. stock futures
YM00,
+0.12%

ES00,
+0.15%

NQ00,
+0.09%

also pointed higher ahead of an abbreviated session set to end at 1 p.m. Eastern Time. U.S. stocks indexes closed broadly higher on Wednesday but lost some gains in the final hour of trading after President Donald Trump vetoed the annual defense policy bill.

Asian stocks were broadly higher but fell in Shanghai after China’s market regulator launched an anti-monopoly investigation of e-commerce giant Alibaba Group
BABA,
+0.14%
.

Read: Here’s what a Brexit trade deal could mean for markets and investors

Despite the pre-Christmas positivity, the threat of COVID-19 still loomed large across Europe with cases rising. The U.K. announced that more regions would enter the toughest Tier 4 level of restrictions on Saturday as the country battles to contain a new strain of the virus, said to be 70% more contagious. The country’s health minister, Matt Hancock, also revealed that a second new strain had been detected, from South Africa. “This new variant is highly concerning because it is yet more transmissible and it appears to have mutated further than the new variant discovered in the U.K.,” he said on Wednesday.

Anheuser-Busch InBev’s stock
ABI,
-0.50%

fell 0.5% as a consortium led by Apollo Global agreed to buy a 49.9% stake in the Budweiser brewer’s U.S.-based metal container plants in a deal worth $3 billion.

British banks were among the FTSE 100’s biggest risers as investors cheered the certainty that a Brexit trade deal would provide. Lloyds Banking Group
LLOY,
+3.99%

climbed 4.6% and Barclays
BARC,
+1.83%

rose 2.4%.



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