Pound Strengthens After U.K, EU Finalize Landmark Post-Brexit Trade Deal
The pound advanced against its most major trading partners in the Asian session on Monday, as the historic deal on future trading relationship allowed for tariff-free trade in goods when the U.K. exits the single market and customs union on December 31.
Britain and the European Union struck a post-Brexit deal on Thursday, ensuring that both sides can continue to trade in goods without tariffs or quotas after the transition period.
There will be extra checks and paperwork for businesses at borders from January.
Under the terms of the new deal, there will be no hard border on the island of Ireland between the Republic of Ireland and Northern Ireland.
The U.K.’s access to the bloc’s financial market must be negotiated outside the accord in specific equivalence deals.
The pact included a five-and-a-half year transition period for the fishing industry, during which the EU fishermen will give up a quarter of the value of the fish they caught in UK waters.
People on short-term business trips would be exempted from market access restrictions such as economic needs tests or imposing work permits.
The UK Parliament is set to vote on the deal on December 30.
The currency strengthened on Thursday, as Britain and the European Union struck a Brexit trade deal to avoid a disastrous departure on the December 31 deadline. It added 0.7 percent versus the franc, 0.4 percent versus the yen and 0.3 percent against both the greenback and the euro for the day.
The pound remained higher versus the greenback, at 1.3568. This marked a 0.3 percent rise from last week’s closing value of 1.3531. Next key resistance for the pound is likely seen around the 1.37 level.
After falling to 1.2040 at 6:00 pm ET, the pound edged up 0.3 percent to 1.2076 against the franc. The pair had finished last week’s deals at 1.2058. Further rise in the pound may face resistance around the 1.24 level.
The pound gained 0.2 percent versus the yen, approaching 140.57. At last week’s trading close, the pair was quoted at 140.27. The pound is likely to face resistance around the 144.00 region, if it gains again.
Data from the Ministry of Economy, Trade and Industry showed that Japan industrial production was unchanged on a seasonally adjusted basis in November. That missed expectations for an increase of 1.2 percent following the 4.0 percent gain in October.
In contrast, the pound depreciated versus the euro, reaching as low as 0.9013. The euro-pound pair was worth 0.8998 at last week’s close. The pound is seen facing support around the 0.92 mark.
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