Pound hits six-month high against Euro after Brexit deal as businesses react with delight to Brussels breakthrough
Business gave a big thumbs-up to this morning’s press conference, where Jean-Claude Juncker confirmed ‘sufficient progress’ had been made to move onto trade talks
THE POUND hit a six-month high against the Euro this morning following the Brexit deal as businesses reacted with delight to the breakthrough in Brussels.
Business gave a big thumbs-up to this morning’s press conference, where Jean-Claude Juncker confirmed “sufficient progress” had been made to move onto trade talks as soon as next week.
After the early hours agreement currency traders bought sterling and sent it surging to €1.151 - a gain of 1.5 per cent from yesterday's low of €1.131, and the highest level since June.
Commenting on the markets’ reaction, Barney Hawkins, investment director at True Potential, the investment firm, said: “News that a breakthrough agreement had been reached in the Brexit negotiations was met positively by the currency markets, which had been granting the pound a stay of execution after the talks appeared to stall earlier in the week.”
But it was less positive against the US dollar, with the pound dipping immediately following the PM confirming the first phase of Brexit talks is almost over, before recovering to be up 0.1 per cent.
And the London stock market flattened at the start of trading this morning, with the FTSE 100 index almost unchanged at 7,322.44 points.
Craig Erlam, senior market analyst at OANDA, said: "The response in the pound to the announcement may come as a surprise given just how significant today's agreement is, but it's worth noting that this has been in the making over the last couple of weeks and it was in both sides' interest to get this done today.
"Had the two sides failed to come to an agreement then the downside in the pound may well have been far greater.
"We've seen a rally in the pound over the last couple of weeks on the expectation of a deal being agreed so what we may be seeing is simply a case of buying the rumour and selling the fact."
But the announcement on the Brexit talks was welcomed widely by UK business leaders.
Stephen Martin, director general of the Institute of Directors, said: "It went right down to the wire, but businesses will be breathing a huge sigh of relief."
He added: "The most pressing concern for UK companies has been their EU staff, who have urgently needed certainty about their future in this country.
"We have grounds to hope now that our members will be able to send their employees off for the Christmas break feeling more comfortable about their status here.”
And Dr Adam Marshall, director general of the British Chambers of Commerce , said: "Businesses will be breathing a sigh of relief that 'sufficient progress' has been achieved.
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“After the noise and political brinksmanship of recent days, news of a breakthrough in the negotiations will be warmly welcomed by companies across the UK.
"Business will particularly cheer the mutual commitment to a transition period to support business confidence and trade, and will want the details confirmed swiftly in the new year when negotiators move on to the big questions around our future trade relationship with the EU.”
On news of a breakthrough CBI Deputy Director General Josh Hardie said it “shows that where there is a will, there is a way”.
He added: “Firms have been watching negotiations closely and today’s announcement will lift spirits in the run up to Christmas.
“Sufficient progress is a present they’ve spent months waiting for.”