Thursday 24 December 2020 2:50 pm

Sterling hits $1.36 amid relief over Brexit deal

Sterling extended gains on Thursday and hit $1.36 on the news that a Brexit deal has been agreed.

Sterling had this morning been boosted by speculation, rising 0.47 per cent to $1.35, up 0.6% on the day and heading towards the 2-1/2 year high of $1.3625 hit last week.

The pound edged up to 90.05 pence per euro, and jumped by 0.46 per cent on the Japanese Yen. 

The pound also drew support after France lifted its ban on freight coming from Britain, which it had enacted in response to a more contagious coronavirus variant in Britain.

A deal has been struck between the UK and EU after years of negotiation, according to reports. A statement is expected this morning.

Sterling has seen plenty of volatility in recent weeks as negotiations between UK and European ministers have stalled and deadlines missed, and a new, more infectious variant of the coronavirus prompted border closures to the UK. 

Asia up

Investors cheered news that Britain and the European Union were on the cusp of striking a narrow trade deal on Thursday that would help them avoid a turbulent start to 2021.

Hopes for more fiscal spending and expectations that coronavirus vaccines will become more available next year also supported global equities.

Asian stocks also rose on the Brexit news. MSCI’s broadest index of Asia-Pacific shares outside Japan rose 0.45 per cent. Australian stocks ended 0.33 per cent higher, while Tokyo shares rose 0.45 per cent.

Chinese stocks fell 0.28%. U.S. stock futures edged up by 0.16%.

Wall Street ended mostly higher on Wednesday, with the Dow Jones Industrial Average closing up 0.38 per cent and the S&P 500 edging 0.07 per cent higher. The Nasdaq Composite declined 0.29 per cent. 

CMC Markets UK market analyst David Madden said: “Stock markets in Europe finished on a bullish note yesterday on the back of optimism that the UK and the EU are close to reaching a trade deal. 

“The UK-EU trade talks have been dragging on and on and people’s patience have been running low. Yesterday afternoon there were reports that a deal was ‘imminent’ and that boosted sentiment in European equity markets. The FTSE 100 underperformed versus its continental counterparts as the rally in the pound held it back, but keep in mind the FTSE 250 rallied over 1.7 per cent – outstripping the eurozone markets.”