Pound off after Brexit deal

TOKYO (Reuters) – FX Signals | The pound hovered below a 2-1/2-year high on Friday after Britain and the European Union struck a narrow Brexit trade deal, while overall sentiment in currency markets was tempered by a stalled U.S. coronavirus economic relief package.

Against the euro, the pound fetched 89.80 pence per euro, after scaling a three-week high of 89.54 on Thursday.

The British currency also hit a 3-1/2-month high of 141.06 yen before easing to 140.22 on the Japanese currency, though trade was slow as many financial markets were shut for Christmas.

Britain sticks to stance in EU trade

While the Brexit deal will preserve Britain’s zero-tariff and zero-quota access to the bloc’s single market and avoid a damaging “no-deal” exit, it does not cover the nation’s much larger and influential finance sector. And, Brussels has made no decision yet on whether to grant Britain access to the bloc’s financial market.

Sterling gains on Brexit deal

“It is important to recognise this is just the beginning of a new trading relationship that can be built on,” wrote Gavin Friend, senior market strategist at National Australia Bank (OTC:NABZY) in London.

“We also have to stand by for both sides to spin the deal in their respective ways designed for domestic consumption. Invariably the national press will respectively talk of ‘wins’ versus the other side.”

While the deal was a relief to every market player, the bare-bones nature of the pact leaves Britain far more detached from the EU, analysts say, suggesting the discount that has dogged UK assets since 2016 will not vanish soon.

EU says Brexit deal still

Pound Higher on Brexit Deal

Britain says Brexit trade deal

The dollar traded at 103.55 yen, down 0.2% on the day while the euro traded almost flat at $1.2188.

The dollar index stood at 90.285, off its 2 1/2-year low of 89.723 touched last week.

The offshore Chinese yuan was flat at 6.5185 per dollar.

Pound off after Brexit deal