Financial markets should analyze the news that UK and EU leaders agreed to go "the extra mile" after a phone call on Sunday to find a compromise on a trade deal.
In a joint statement, British Prime Minister Boris Johnson and the President of the European Commission, Ursula von der Leyen, admitted that "deadlines have repeatedly been missed" in lengthy negotiations on their future trade relations over the past 10 months.
Sunday was seen as a fixed date for an agreement or for a signal that a no-deal Brexit would be imminent on December 31 so that a pact could be concluded.
The British pound appeared to have reacted positively, rising against the euro and the US dollar in trade on reports of an extension of talks.
In the latest action on Sunday in New York the pound
bought $ 1.3308, up 0.6% against the US dollar; and one euro
changed hands at € 1.0978, a decrease of 0.6% against the British currency.
The UK's FTSE 100
However, there may be some resistance due to the strengthening of the Sterling weekend.
Exporters who typically do not rely on the UK market, such as GlaxoSmithKline
and liquor maker Diageo have won negative headlines over the possibility of a trade deal, while financial institutions like Lloyds Banking Group
The FTSE 100 closed trading down 0.8% on Friday but was virtually unchanged for the week but was enough to land a five-week winning streak for the UK exchange as hopes of a deal included some bullish buys in the last month based.
US stock index futures were quoted higher with the introduction of Pfizer
The vaccine candidate offered some strength to optimistic investors following emergency approval by the Food and Drug Administration, overshadowing the lack of progress on coronavirus tax relief and rising COVID-19 infections.
Indeed, the virus pandemic has largely put the spotlight on Brexit-related tensions that would otherwise be seen as the main risk for investors.
Prime Minister Johnson warned Sunday that the two sides are "still very far apart on some important issues".
UK and EU negotiators have argued over the right of European fishermen to trawl in UK waters and the regulatory “level playing field” that the UK should adhere to as the price for access to the European market.
Germany was the UK's second highest export market for goods last year and the UK's main source of imported goods. The Netherlands and France were also the top five markets for exports and imports in the UK.
The total rise in barriers, according to an earlier estimate by Oxford Economics, will account for up to 9% of trade volume, for both UK exports to the EU and EU exports to the UK. A free trade pact would also have created more obstacles, such as customs administration and regulatory barriers, which economists estimate would represent around 4.5% of current trade.
"Britain could negotiate with the EU by the end of the year and possibly still avoid a Brexit without a trade deal," wrote Citigroup researchers in a report by their CIO group, including David Bailin, Chief Investment Officer.
“An EU trade agreement would never be 'everything' and therefore final for the UK's economic future. The pound could still move strongly on a "deal" or "no deal" event, with the whole action moving quickly and unpredictably, "Citi's team wrote on Sunday's research note.