For nearly half a decade, the pound has been whipsawed by Brexit negotiations – yet news that a trade deal has been reached saw it curb its advance.
Sterling was up 0.3% against the dollar to $1.3533 as of 3:43 p.m. in London, having earlier risen as much as 0.9%. Strategists say much of the optimism is already baked in, with the currency up nearly 10% since the end of June while the relative cost of hedging pound weakness over the next year is at its lowest since March.
The coronavirus and the country’s grim economic outlook have also muscled in on Brexit’s influence, while investors say the limited scope of the agreement – which won’t apply to financial services and the services sector – limits benefits for U.K. assets.