The pound hit its highest level of the year against the dollar on the final day of 2020, as traders took heart from the UK parliament’s approval of Britain’s post-Brexit trade deal — a key formality in avoiding a more disruptive break from the EU’s single market.
Sterling, which has been rallying since March’s market turmoil, rose 0.3 per cent to $1.3659 in thin trading in London. It also climbed 0.9 per cent against the euro to €1.1171.
The pound has moved modestly higher since the UK and EU struck a deal on the shape of future trading arrangements on Christmas Eve, after mounting concern this month that the post-Brexit transition period might end on January 1 without an agreement. The deal was overwhelmingly approved by parliament on Wednesday.
“While not perfect, we certainly think it’s a reasonable deal and takes away that cliff edge of the United Kingdom exiting without a trading relationship for goods,” said David Zahn, head of European fixed…