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A UK-EU free trade deal has long been high on investors’ wish list this Christmas (along with successful vaccine rollouts and a return to normal, happier times).
And today, four and a half years after the referendum, a narrow agreement may finally be imminent.
Sterling is pushing higher this morning, and the London stock market is expected to rise when trading begins at 8am, as expectations build of an Brexit trade deal announcement this morning.
The pound has gained over three quarters of a cent in early trading against the US dollar, to around $1.357, on growing optimism that the two sides will avoid moving to WTO trade terms when the transition period ends on 31st December.
That adds to yesterday’s gains when the news broke that a deal was close. It takes sterling closer to the 31-month high of $1.362 set earlier this month.
Josh Warner of City Index says:
Hopes of a Brexit deal in time for Christmas sent the pound higher this morning, and the gradual re-opening of the UK-France border is also providing support.
Josh Warner
(@CityIndex_Josh)European markets to head higher this morning as they prepare for the UK and the EU to unveil a long-awaited Brexit deal #Brexit #indices #Commodities #forex Via @CityIndex https://t.co/ajZbabjt5M
Deal optimism is also expected to lift shares in Europe, with Britain’s FTSE 100 called up 33 points, or 0.5%, at 6528 points. It’s only a half-day session in the City, but we could still get a traditional ‘Santa Rally’.
The two sides have worked through the night in Brussels, putting the finishing touches to a legal text that is expected to preserve tariff-free trade in goods between the EU and UK, and also protect co-operation in other areas such as security.
As Daniel Boffey in Brussels and Heather Stewart explain:
A post-Brexit trade and security treaty with the European Union is within “touching distance”, Downing Street said on Wednesday night as Boris Johnson prepared to unveil his hard-fought Christmas Eve deal.
The prime minister is expected to announce the terms of the agreement following a final call with the European commission president Ursula von der Leyen – but the two sides battled deep into the night to gain a last-minute advantage.
A press conference planned for early on Wednesday night did not go ahead as the two sides had needed further time to nail down the details which will include unprecedented provisions for zero tariffs or quotas on all goods.
There had been hopes that the deal might come last night, but (as so often with Brexit), this goal slipped as negotiators kept hammering out the final details.
The European Commission president’s spokesman, Eric Mamer, predicted an early start:
Eric Mamer
(@MamerEric)#brexit work will continue throughout the night. Grabbing some sleep is recommended to all brexit-watchers at this point. It will hopefully be an early start tomorrow morning…
The BBC’s Laura Kuenssberg reports that several calls took place between Boris Johnson and Ursula von der Leyen to get a deal done, with fish the sticking point:
Laura Kuenssberg
(@bbclaurak)Understand there were four calls between PM and EU chief Von Der Leyen yday to get Brexit deal over the line. One final one in about half an hour expected to sign and seal after late night wrangles over individual fish species (am not making this up)
There had been rumours of a press conference at 8am UK time, but this may now be slipping, the BBC’s Katya Adler reports.
Katya Adler
(@BBCkatyaadler)Morning! After negotiators worked through the night, the timings are slipping of expected press conferences following a call between the PM and the European Commission chief .. #Brexit
Laura Kuenssberg
(@bbclaurak)Morning – I hope you are asleep, especially as it’s Christmas Eve. If you are awake, expect PM a to talk to EU chief at about 7am UK time now with a press conference to follow at about 8
Our Politics liveblog is covering the drama, but we’ll be tracking the financial reaction here in the final trading day before Christmas: