London Daily

Focus on the big picture.
Thursday, Jul 10, 2025

Britain, EU reach outline of Brexit deal

Britain, EU reach outline of Brexit deal

A trading deal the City of London has sweated over for almost half a decade looks like it's finally here.

With Britain forging the blueprint of a deal with the European Union, the pound strengthened 1.1% to $1.3501 after the news of a breakthrough. It earlier rallied as much as 1.6% to $1.3571, the biggest intraday gain in more than a week. The yield on 10-year government bonds jumped as much as 13 basis points to 0.31%, the biggest intraday increase since March.

"The tea leaves are shaped in the right direction," Luke Hickmore, a fund manager at Aberdeen Standard Investments who helps manage £35 billion ($46 billion), said before the announcement. "Certainly the market is buying into it."

Negotiators are still putting the finishing touches to a Brexit accord, according to officials familiar with the matter who spoke on condition of anonymity.

The FTSE 250 index of more domestically oriented U.K. companies surged as much as 1.7%, while the FTSE 100 had a more muted gain of 0.7% as the pound's advance weighed on exporters. Options traders had been positioning for a deal, dragging down the cost of hedging a weaker sterling over the coming month to the lowest since Dec. 4.

Money markets pared bets for monetary easing by the Bank of England, pushing back the pricing of a 10-basis-point interest-rate cut to March 2022, compared with expectations Tuesday for November 2021.

The pound could rise as high as $1.37 if a deal is finalized and Britain and the EU minimize disruption during the initial adjustment phase next year, said Lee Hardman, foreign-exchange strategist at MUFG Bank. Yet the country's weak economic fundamentals could limit gains. "Tightening economic restrictions will increase pressure on the Bank of England to implement negative rates early next year, posing downside risks," he said.

Virus impact


Prime Minister Boris Johnson imposed tougher regulations Wednesday throughout a swath of England in an effort to stamp down on the mutant virus strain that's spreading quickly across the country.

"Due to the limited nature of a deal, we don't necessarily see sterling finding too much relief beyond an additional percentage point," especially as tighter restrictions look to be extended to other parts of the U.K., said Simon Harvey, a foreign-exchange analyst at Monex Europe.

The pound was already trading in turbulent territory as the time for a deal ran out. Volatility over the past week is near the highest since March, when the coronavirus roiled global financial markets. At about 15%, it's nearly double that of the euro-dollar pair. And its implied volatility over the next week beats all other currencies, save Brazil's real and Turkey's lira.

Newsletter

Related Articles

0:00
0:00
Close
Severe Heatwave Claims 2,300 Lives Across Europe
NVIDIA Achieves Historic Milestone as First Company Valued at $4 Trillion
Declining Beer Consumption Signals Cultural Shift in Germany
Linda Yaccarino Steps Down as CEO of X After Two Years
US Imposes New Tariffs on Brazilian Exports Amid Political Tensions
Azerbaijan and Armenia are on the brink of a historic peace deal.
Emails Leaked: How Passenger Luggage Became a Side Income for Airport Workers
Polish MEP: “Dear Leftists - China is laughing at you, Russia is laughing, India is laughing”
BRICS Expands Membership with Indonesia and Ten New Partner Countries
Weinstein Victim’s Lawyer Says MeToo Movement Still Strong
U.S. Enacts Sweeping Tax and Spending Legislation Amid Trade Policy Shifts
Football Mourns as Diogo Jota and Brother André Silva Laid to Rest in Portugal
Labour Expected to Withdraw Support for Special Needs Funding Model
Leaked Audio Reveals Tory Aide Defending DEI Record
Elon Musk Founds a Party Following a Poll on X: "You Wanted It – You Got It!"
London Stock Exchange Faces Historic Low in Initial Public Offerings
A new online platform has emerged in the United Kingdom, specifically targeting Muslim men seeking virgin brides
Trump Celebrates Independence Day with B-2 Flyover and Signs Controversial Legislation
Boris Johnson Urges Conservatives to Ignore Farage
SNP Ordered to Update Single-Sex Space Guidance Within Days
Starmer Set to Reject Calls for Wealth Taxes
Stolen Century-Old Rolls-Royce Recovered After Hotel Theft
Macron Presses Starmer to Recognise Palestinian State
Labour Delayed Palestine Action Ban Over Riot Concerns
Swinney’s Tax Comments ‘Offensive to Scots’, Say Tories
High Street Retailers to Enforce Bans on Serial Shoplifters
Music Banned by Henry VIII to Be Performed After 500 Years
Steve Coogan Says Working Class Is Being ‘Ethnically Cleansed’
Home Office Admits Uncertainty Over Visa Overstayer Numbers
JD Vance Questions Mandelson Over Reform Party’s Rising Popularity
Macron to Receive Windsor Carriage Ride in Royal Gesture
Labour Accused of ‘Hammering’ Scots During First Year in Power
BBC Head of Music Stood Down Amid Bob Vylan Controversy
Corbyn Eyes Hard-Left Challenge to Starmer’s Leadership
London Tube Trains Suspended After Major Fire Erupts Nearby
Richard Kemp: I Felt Safer in Israel Under Attack Than in the UK
Cyclist Says Police Cited Human Rights Act for Riding No-Handed
China’s Central Bank Consults European Peers on Low-Rate Strategies
AI Raises Alarms Over Long-Term Job Security
Saudi Arabia Maintains Ties with Iran Despite Israel Conflict
Musk Battles to Protect Tesla Amid Trump Policy Threats
Air France-KLM Acquires Majority Stake in Scandinavian Airlines
UK Educators Sound Alarm on Declining Child Literacy
Shein Fined €40 Million in France Over Misleading Discounts
Brazil’s Lula Visits Kirchner During Argentina House Arrest
Trump Scores Legislative Win as House Passes Tax Reform Bill
Keir Starmer Faces Criticism After Rocky First Year in Power
DJI Launches Heavy-Duty Coaxial Quadcopter with 80 kg Lift Capacity
U.S. Senate Approves Major Legislation Dubbed the 'Big Beautiful Bill'
Largest Healthcare Fraud Takedown in U.S. History Announced by DOJ
×