Rising hopes of a Brexit deal boosted sterling to its highest level in two-and-a-half years on Wednesday as investment giants predicted global market euphoria will spill over into 2021.

Investors piled into the pound on currency markets after hopes of a breakthrough were stoked by European Commission president Ursula von der Leyen revealing there is a “path to an agreement now”.

Sterling extended its rally to rise as high as $1.3552 against the weak dollar - the highest level since May 2018 - before later giving up some gains to dip back under $1.35. Stock markets were also boosted by growing optimism over Brexit, a US stimulus deal and the vaccine rollout.

It came as top investors looking after assets worth trillions of pounds - including BlackRock, Aberdeen Standard Investments, Principal Global Investors and Premier Miton - told The Telegraph they expected strong gains next year, particularly in the UK and Europe.

“The UK market trades at a discount to other developed markets,” said Jon Hudson, an investment manager at Premier Miton. “There is a good chance the discounts close during 2021.”

He predicted UK stocks could outperform most other assets next year if a trade deal with the EU is agreed and the vaccine in Britain is widely rolled out. Traders said Wednesday's moves on markets suggested investors were pricing in a 75pc chance of a deal.

Source: Telegraph.co.uk

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