Boris Johnson has agreed a Brexit deal with EU negotiators. As the news breaks sterling is already firmly in rally mode, soaring 0.78% on the dollar to a five month high and up 0.38% versus the euro.
This was backed up by the European Commission President Jean-Claude Juncker.
Predictably, UK domestic stocks are also rising, some sharply. UK housebuilders and banks sprang to life.
The two sides have been working on the legal text of a deal, but it will still need the approval of both the UK and European parliaments.
So investors should not get too carried away. For a start, details of the agreement remain to be seen. Already the DUP, a key ally if the Government is to get this deal passed through parliament, have already cast doubt on its sign off, saying they still cannot support it.
The devil will be in the detail and investors should sit tight and wait.
‘A big win for Boris. If he manages to get it through parliament, we should see a wave of “risk-on” trades coming into UK market’, said Artur Baluszynski, head of research at Henderson Rowe, the boutique wealth manager.
But let caution prevail, said Baluszynski. ‘Let us wait and see all the details and then let the markets decide how likely it is for the UK parliament to accept it. For now, expect some positive momentum in sterling and domestically focused asset classes.’