London Daily

Focus on the big picture.
Thursday, Jul 31, 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
Former Judge Charged After Drunk Driving Crash Kills Comedian in Brazil
Jeff Bezos hasn’t paid a dollar in taxes for decades. He makes billions and pays $0 in taxes, LEGALLY
China Increases Use of Exit Bans Amid Rising U.S. Tensions
IMF Upgrades Global Growth Forecast as Weaker Dollar Supports Outlook
Procter & Gamble to Raise U.S. Prices to Offset One‑Billion‑Dollar Tariff Cost
House Republicans Move to Defund OECD Over Global Tax Dispute
Botswana Seeks Controlling Stake in De Beers as Anglo American Prepares Exit
Trump Administration Proposes Repeal of Obama‑Era Endangerment Finding, Dismantling Regulatory Basis for CO₂ Emissions Limits
France Opens Criminal Investigation into X Over Algorithm Manipulation Allegations
A family has been arrested in the UK for displaying the British flag
Mel Gibson refuses to work with Robert De Niro, saying, "Keep that woke clown away from me."
Trump Steamrolls EU in Landmark Trade Win: US–EU Trade Deal Imposes 15% Tariff on European Imports
ChatGPT CEO Sam Altman says people share personal info with ChatGPT but don’t know chats can be used as court evidence in legal cases.
The British propaganda channel BBC News lies again.
Deputy attorney general's second day of meeting with Ghislaine Maxwell has concluded
Controversial March in Switzerland Features Men Dressed in Nazi Uniforms
Politics is a good business: Barack Obama’s Reported Net Worth Growth, 1990–2025
Thai Civilian Death Toll Rises to 12 in Cambodian Cross-Border Attacks
TSUNAMI: Trump Just Crossed the Rubicon—And There’s No Turning Back
Over 120 Criminal Cases Dismissed in Boston Amid Public Defender Shortage
UN's Top Court Declares Environmental Protection a Legal Obligation Under International Law
"Crazy Thing": OpenAI's Sam Altman Warns Of AI Voice Fraud Crisis In Banking
The Podcaster Who Accidentally Revealed He Earns Over $10 Million a Year
Trump Announces $550 Billion Japanese Investment and New Trade Agreements with Indonesia and the Philippines
US Treasury Secretary Calls for Institutional Review of Federal Reserve Amid AI‑Driven Growth Expectations
UK Government Considers Dropping Demand for Apple Encryption Backdoor
Severe Flooding in South Korea Claims Lives Amid Ongoing Rescue Operations
Japanese Man Discovers Family Connection Through DNA Testing After Decades of Separation
Russia Signals Openness to Ukraine Peace Talks Amid Escalating Drone Warfare
Switzerland Implements Ban on Mammography Screening
Japanese Prime Minister Vows to Stay After Coalition Loses Upper House Majority
Pogacar Extends Dominance with Stage Fifteen Triumph at Tour de France
CEO Resigns Amid Controversy Over Relationship with HR Executive
Man Dies After Being Pulled Into MRI Machine Due to Metal Chain in New York Clinic
NVIDIA Achieves $4 Trillion Valuation Amid AI Demand
US Revokes Visas of Brazilian Corrupted Judges Amid Fake Bolsonaro Investigation
U.S. Congress Approves Rescissions Act Cutting Federal Funding for NPR and PBS
North Korea Restricts Foreign Tourist Access to New Seaside Resort
Brazil's Supreme Court Imposes Radical Restrictions on Former President Bolsonaro
Centrist Criticism of von der Leyen Resurfaces as she Survives EU Confidence Vote
Judge Criticizes DOJ Over Secrecy in Dropping Charges Against Gang Leader
Apple Closes $16.5 Billion Tax Dispute With Ireland
Von der Leyen Faces Setback Over €2 Trillion EU Budget Proposal
UK and Germany Collaborate on Global Military Equipment Sales
Trump Plans Over 10% Tariffs on African and Caribbean Nations
Flying Taxi CEO Reclaims Billionaire Status After Stock Surge
Epstein Files Deepen Republican Party Divide
Zuckerberg Faces $8 Billion Privacy Lawsuit From Meta Shareholders
FIFA Pressured to Rethink World Cup Calendar Due to Climate Change
SpaceX Nears $400 Billion Valuation With New Share Sale
×