British pound rises as Brexit talks extended

by Jonathan Adams

The British pound rose against the euro and the U.S. dollar on reports of an extension of talks

Financial markets were set to parse news that U.K. and EU leaders agreed that they should go “the extra mile” to try to find a compromise on a trade deal, following a Sunday phone conversation.

In a joint statement, U.K. Prime Minister Boris Johnson and Ursula von der Leyen, the president of the European Commission, acknowledged that “deadlines have been missed over and over” during protracted negotiations extending over the past 10 months on their future trade relationship.

Sunday had been viewed as a firm date for an agreement to occur or for a signal that a no-deal Brexit would be at hand with the Dec. 31 deadline for a pact to be struck looming.

The British pound appeared to react favourably, rising against the euro and the U.S. dollar in trade, on reports of an extension of talks.

In recent action on Sunday in New York, the pound bought $1.3308, a gain of 0.6% against dollars; and a euro changed hands at €1.0978, down 0.6% against the British currency.

The U.K.’s FTSE 100, however, may face some resistance due to sterling’s weekend strengthening.

Exporters that tend not to rely on the U.K. market, such as pharmaceutical GlaxoSmithKline and spirits maker Diageo, have gained when negative headlines about the possibility of a trade deal emerging, while financial institutions such as Lloyds Banking Group have dropped.

The FTSE 100 closed Friday trade off 0.8% but was virtually unchanged for the week, but enough to snap a five-week win streak for the British bourse as hope for a deal supported some bullish buying in the past month.

Futures for U.S. stock-indexes were indicated higher as the rollout of Pfizer and BioNTech’s vaccine candidate, after emergency-use authorization from the Food and Drug Administration, offered some grist for upbeat investors, overshadowing lack of progress on coronavirus fiscal relief and rising COVID-19 infections.

This article is for information purposes only.
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