The pound has risen after Britain and the EU secured a new post-Brexit deal for Northern Ireland to end long-running tensions following the UK’s withdrawal.
Sterling rose 0.7% to US$1.20 and 0.3% to 1.14 euro after Prime Minister Rishi Sunak and European Commission President Ursula von der Leyen signed a key deal at a meeting in Windsor, Berkshire.
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The FTSE 100 index was also trading higher by 0.6% or 50.7 points at 7929.4 in afternoon trade on Monday.
Dawn may be about to usher in a new era of calmer relations between the UK and the EU, but hopes are still not going away that it will deliver a significant boost to the post-Brexit economy.
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The deal is set to finalize Brexit more than six years after the 2016 referendum and resolve trade issues created by the Northern Ireland Protocol.
But there are concerns about the challenge ahead for Mr Sunak, who still has to win the approval of the Democratic Unionist Party (DUP) to ensure powers in Northern Ireland are restored, and MPs on the prime minister Vote amid pressure to deliver Commons.
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Susannah Streeter, head of money and markets at Hargreaves Lansdowne, said: “A new era of calmer relations between the UK and the EU may be on the way, but hopes are still not going away that this will be an important start.” A post-Brexit boost for the economy.
“This new consensual approach should help for other difficult political problems such as migration, but in itself is unlikely to immediately move the dial for a major uplift for UK business.
“There are some concerns about the opposition in parliament who would have to ratify the deal, but the Conservative rebels’ power has been weakened.”
Walid Koudmani, chief market analyst at XTB, said the EU-UK deal with respect to Northern Ireland would end a long period of uncertainty.
But he added that unless any deal is fully cleared by the DUP and Tory Eurosceptics, volatility in the pound is likely to increase.
“Any hurdle in this process could prove to be quite adverse for the investor mood and could lead to a pullback from the current levels which have already acted as resistance,” he added.
