Pound Jumps In Early Trading After Brexit Talks Extension

After tumbling on Friday amid speculation that a hard Brexit was inevitable, the British pound jumped in early Asian trading on Sunday following the earlier report that the U.K. and the EU said they will continue talking about a trade agreement, keeping hopes for a late deal alive.

Cable jumped as much as 1.2% higher at $1.3378 following UK PM Boris Johnson and European Commission President Ursula von der Leyen agreed to keep working on a post-Brexit accord, after earlier saying that negotiators had until Sunday to come up with a deal.

The positive Brexit news may also be one of the reasons  why spreadbetting firm IG is showing US markets as modestly higher ahead of futures open.

As reported earlier, the extension follows German Chancellor Angela Merkel's exhortation urging that the two sides "should try everything to achieve a result." In a joint statement, the two sides acknowledged that "despite the fact that deadlines have been missed over and over, we think it is responsible at this point to go the extra mile."

"We had a useful phone call this morning. We discussed the major unresolved topics. Our negotiating teams have been working day and night over recent days. And despite the exhaustion after almost a year of negotiations, despite the fact that deadlines have been missed over and over we think it is responsible at this point to go the extra mile. We have accordingly mandated our negotiators to continue the talks and to see whether an agreement can even at this late stage be reached."

But in an indication of just how desperate both London and Brussels are to find something to feed markets and the public that might inspire optimism, the FT quoted an anonymous senior official in the Belgian capital, who said only that talks were "not going backwards."

As Bloomberg adds, "with less than three weeks until Dec. 31, the date when the transition period for the U.K.’s departure from the EU officially ends, many investors had hoped for a breakthrough by Sunday -- or alternatively clarity that Britain would indeed exit the bloc without a deal. Instead, they must prepare to parse yet more Brexit headlines amid choppy trading, with liquidity likely to get worse as the holiday season nears."

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