Relieved pound jumps as Brexit talks go beyond deadline

By Saikat Chatterjee LONDON (Reuters) - The British pound gained a percent against the dollar and the euro in relief after Britain and the European Union agreed to continue talks on post-Brexit trade beyond Sunday's deadline. Against the dollar, the pound rose 1.1% to $1.3360, compared with Friday's close of $1.3222. Against the euro, it strengthened 1 percent to 90.58 pence.

Reuters December 14, 2020 02:05:09 IST
Relieved pound jumps as Brexit talks go beyond deadline

Relieved pound jumps as Brexit talks go beyond deadline

By Saikat Chatterjee

LONDON (Reuters) - The British pound gained a percent against the dollar and the euro in relief after Britain and the European Union agreed to continue talks on post-Brexit trade beyond Sunday's deadline.

Against the dollar, the pound rose 1.1% to $1.3360, compared with Friday's close of $1.3222. Against the euro, it strengthened 1 percent to 90.58 pence.

While trading was largely illiquid in late Sunday hours, the jump in the value of the pound pointed towards a relief rally for the British currency on Monday, after it fell to a one-month low last week on concern that Britain would crash out of the EU's orbit without a deal in place.

British Prime Minister Boris Johnson and the president of the EU's executive Commission, Ursula von der Leyen, had given negotiators a Sunday deadline to find a way to resolve an impasse on arrangements that would guarantee Britain zero-tariff and zero-quota access to the EU's single market.

On Sunday, they mandated negotiators to continue discussions.

Despite the gains, analysts were cautious on the outlook for the pound, as the currency's 18% rally to a 2-1/2 year high earlier this month has meant the room for disappointment is low if a trade deal falls short of market expectations.

"There is already a lot of good news priced in at these levels and even if we get some sort of a skinny deal before the end of the year, the market will see through it and sell the pound," said Marija Veitmane, a multi-asset strategist at State Street Global Markets.

Latest positioning data for the week ending Dec. 8 showed hedge funds flipped to a net long position on the pound on expectations of a trade deal.

(Reporting by Saikat Chatterjee; Editing by Andrew Cawthorne and Alex Richardson)

This story has not been edited by Firstpost staff and is generated by auto-feed.

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