The London stock market crept up today as investors were buoyed by the UK and European Union being on the threshold of striking a post-Brexit trade deal.
The FTSE 100 index rose by 0.48 per cent or 31 points to 6,527 in early trading this morning, while the pound was up 0.5 per cent against the dollar at $1.3574.
But gains on the markets were tempered by concerns over another new strain of Covid-19, with the UK implementing a travel ban on South Africa and millions more people set to be under the toughest coronavirus restrictions from Boxing Day.
An announcement on the Brexit deal – four years after the country voted to leave the EU – is expected later today, after talks continued through the night on the details.
Britain and the EU were said to have progressed on resolving issues such as fishing rights and the ‘level playing field’ measures aimed at preventing unfair competition.
Meanwhile, tempers flared in Kent as the French reopened the border to allow lorries to cross the Channel for the first time since emergency restrictions were imposed.
The pound has strengthened 1.4 per cent versus the dollar since 1.30pm yesterday when Reuters first quoted sources saying that a Brexit deal appeared imminent.
The currency is now heading back towards the two-and-a-half year high of $1.3625 which was hit last week. Against the euro, the pound was up 0.3 per cent at 89.9p.
The pound was up 0.5% against the dollar at $1.3574 today as Brexit deal hopes increased
More than 6,000 HGVs were being held in the county, with drivers being tested for Covid-19 before they are allowed to travel to France. Transport Secretary Grant Shapps called for ‘patience’ and said work continues to ‘get traffic rolling’.
Reacting to the Brexit development, Axi global markets strategist Stephen Innes said: ‘So, the never-ending ebb and flow of Brexit headline roistering might finally see closure on the most widely contested divorce in the history of humanity.’
The expected deal comes with just days left before the current trading arrangements expire on December 31. Prime Minister Boris Johnson led a late-night call with Cabinet ministers to update them on the situation.
He has been in close contact with European Commission president Ursula von der Leyen in recent days as top-level efforts intensified to get a deal over the line. The pair are expected to have a further call on Christmas Eve to agree the deal.
A deal covering the UK-EU trading relationship worth almost £670billion will come as a relief to business leaders.
If, as expected, it provides for trade free from tariffs and quotas the economic shock of breaking away from the EU’s single market and customs union will be softened.
The FTSE 100 index and the pound against the dollar are shown for the year of 2020 so far
A dealer works in front of monitors at the Hana Bank in Seoul, South Korea, on Christmas Eve
The Office for Budget Responsibility had forecast that a no-deal Brexit could wipe 2 per cent off gross domestic product – a measure of the size of the economy – in 2021, adding to the damage to jobs and livelihoods already caused by coronavirus.
What happens next if a Brexit deal is done?
If and when a package is finalised, MPs will need to pass legislation putting it on the statute books in time for the end of the transition period on January 1.
With Christmas Day tomorrow, this is likely to happen next week. The Commons will be recalled from its festive break and potentially consider all the stages of a Bill in one day.
The package is virtually guaranteed to be approved, as Boris Johnson has an 80-strong majority and Labour has indicated it will at least abstain – if not support the deal.
Meanwhile, Brussels will short-cut its own processes, with the EU Council of member states expected to grant ‘provisional’ implementation before the deadline, rather than the European Parliament approving it in advance.
This has angered many MEPs, as they will be under massive pressure to sign off the deal if it has already come into effect.
But the details of the deal will be closely scrutinised to see where either side has compromised.
Meanwhile, as fears over the pandemic continued, Health Secretary Matt Hancock warned the ‘highly concerning’ new variant is believed to be more transmissible than the mutant strain that resulted in the creation of the new Tier 4 restrictions.
From 9am on Christmas Eve, visitors arriving into England who have been in or travelled through South Africa in the previous 10 days will not be permitted entry and direct flights will be banned, the Department for Transport said.
The ban excludes cargo and freight without passengers, and also does not include British and Irish nationals, visa holders and permanent residents, who will be able to enter but are required to self-isolate for 10 days along with their household.
Any exemptions usually in place – including for those related to employment – will not apply and passengers arriving in England from South Africa after 9pm on Wednesday cannot be released from self-isolation through Test to Release.
Government figures showed a further 744 people were reported to have died within 28 days of testing positive for Covid-19, the highest such figure since April 29 during the first peak of the virus.
There were a further 39,237 lab-confirmed cases of coronavirus as of 9am on Wednesday, the highest figure reported on a single day throughout the whole pandemic – although this is in part due to much wider testing.
Areas moving to Tier 4 from Boxing Day are: Sussex, Oxfordshire, Suffolk, Norfolk and Cambridgeshire, those parts of Essex not yet in Tier 4, Waverley in Surrey and Hampshire – including Portsmouth and Southampton but with the exception of the New Forest.
A man cleans the street in front of 10 Downing Street in London this morning as the UK and European Union are said to be on the threshold of striking a post-Brexit trade deal
Traffic blocks the roads around the Port of Dover in Kent yesterdayafter French authorities announced that the coronavirus ban had been lifted and journeys from the UK could resume
Prime Minister Boris Johnson led a late-night call with Cabinet ministers to update them on the situation over the Brexit deal yesterday. He is pictured at Downing Street on December 13
Tier 4 restrictions include a warning to stay at home, a limit on household mixing to two people outdoors and force the closure of many shops, hairdressers and gyms.
The measures come on top of Tier 3 restrictions such as the closure of pubs and restaurants except for takeaways and deliveries.
Bristol, Gloucestershire, Somerset including the North Somerset council area, Swindon, the Isle of Wight, the New Forest and Northamptonshire as well as Cheshire and Warrington will all be escalated to Tier 3.
Cornwall and Herefordshire move from Tier 1 to Tier 2. The changes mean 24 million people will now be in Tier 4, or 43 per cent of the population of England.
Elsewhere, New York City Mayor Bill de Blasio announced that, due to a variant coronavirus in the UK, authorities would personally visit all travellers from the UK to ensure they are in quarantine.