Pound jumps as EU and Britain seal post-Brexit trade deal

The pound jumped Thursday, while European stock markets were little changed, as Britain and the European Union reached a trade deal after months of talks on the terms of commerce in the aftermath of Brexit.

Sterling advanced against both the dollar and euro, while both London and Paris ended little changed. Frankfurt was closed, while Wall Street ended its own holiday-shortened session modestly higher despite continued uncertainty over a massive US stimulus package.

Traders in London said early gains were capped by rising fears over a new strain of the coronavirus that has forced the UK to impose tougher regional lockdowns across the nation.

The pound was the main focus of attention as Britain and the European Union hammered out the final details on an agreement that ensures that Britain will not now face EU tariffs on cross-Channel commerce.

Under the agreement, EU Commission president Ursula Von der Leyen said that although the UK would become a “third country,” it would be a trusted partner.

The agreement became possible after the two sides reached a compromise over fishing as both sides haggled over the access EU fishermen will get to Britain’s waters after the end of the year.

Economists expect both economies, already weakened by the coronavirus epidemic, to take a hit as supply chains are disrupted and costs mount.

Despite this, the threat of a return to tariffs will have been removed, and relations between the former partners will rest on a surer footing.