Brexit Breakthrough

 
After months of discussions and nearly a year and a half after the Brexit referendum took place, there has been a breakthrough in the Brexit talks. Both sides have now agreed on major key issues which was vital before moving onto the trade talks, which are estimated to begin in February of next year.
Overview of the deal

• The Irish border

One of the key issues which stopped Theresa May agreeing to a deal earlier was the Irish border. No one wants a hard border between the Irish neighbours, and it looks like this quirk of Ireland can be preserved. The deal means there would be no new regulatory barriers between Northern Ireland and rest of the United Kingdom, and therefore Northern Irish businesses will be able to continue to have access to the UK market, which was a key concern for the Democratic Unionist Party (DUP).

• The divorce bill

Since the negotiations began a few months ago, there were different amounts mentioned starting from £20 billion and going up to £100 billion. When the British people voted to leave the EU, they did not expect to pay such large amounts to not be part of bloc but instead were looking to spend the promised £350 million per week on NHS which was promoted by the Leave campaign. Now Britain is likely to pay between £35 and £39 billion to the EU under the Brexit deal.

• Citizen’s rights

Another major promise from Theresa May was ensuring EU citizens rights would be guaranteed after UK formally leaves the EU and the same rules to be applied to the UK citizens living in the EU. The deal also includes a point which will allow family members who do not live in the UK to join them in the future.

• European Court of Justice (ECJ)

This deal will potentially anger the Brexiteers as it means that ECJ will continue to have a role overseeing rights of EU nationals in the UK for eight years after the withdrawal date. Donald Tusk, the President of the European Council has said that UK must respect EU law during the transition period which is expected to last for around two years after the official leaving date of March 2019.
Financial markets
We did not see too much movement in the financial markets after the news of a breakthrough deal came out. The Pound weakened against the US Dollar on Friday by around -0.81% to 1.33 level. The Euro strengthened against the Pound and was up by around 0.75% at the end of the close at 0.87 level. Different story for FTSE100, it was up by around 1.10% at 7,399 at the end of the European close on Friday.
GBPUSD:

Source: Encrypt Investment MT4
The Euro strengthened against the Pound when the news came out, which has caused more uncertainty around the matter. The Euro is up by around 21% against the Pound since January and we could see more gains for the Euro as the UK economy keeps outperforming in the coming months.
EURGBP

Source: Encrypt Investment MT4
As the Pound fell, we saw the FTSE100 jump higher as a weak Pound boosts the earnings for London listed companies with international profits. The Index is up 3% since the start of the year.
FTSE100

Source: Encrypt Investment MT4