The pound sterling climbed against the dollar as further details of a future relationship between the European Union and U.K. emerged Thursday.
The U.K. government published a 26-page document, a "political declaration," setting out the framework for the future relationship between the U.K. and EU post-Brexit. The details have been agreed between the U.K. and the European Commission. The latest document accompanies a 585-page draft withdrawal agreement published Nov. 15.
The pound climbed about 0.67% to $1.286 at U.K. market close, 4.30 p.m. Greenwich Mean Time, vs. market open Thursday.
Unlike the draft withdrawal agreement, the political declaration outlined information on financial services.
"The parties are committed to preserving financial stability, market integrity, investor and consumer protection and fair competition, while respecting the parties' regulatory and decision-making autonomy, and their ability to take equivalence decisions in their own interest," said the declaration text.
Both the EU and U.K. agreed to have equivalence frameworks in place. Under equivalence, similar frameworks allow third-country firms to provide services to clients in the European Economic Area on the condition that domestic market rules have been deemed equivalent.
The text said the U.K. and EU "should start assessing equivalence with respect to each other under these frameworks as soon as possible after the (U.K.'s) withdrawal from the Union," and should work to conclude these assessments before the end of June 2020.
Overall, the EU and U.K. have agreed "to develop an ambitious, wide-ranging and balanced economic partnership. This partnership will be comprehensive, encompassing a free trade area as well as wider sectoral cooperation where it is in the mutual interest of both parties," said the declaration text.
The future partnership "should facilitate trade and investment between the parties to the extent possible, while respecting the integrity of the (EU's) single market and the customs union as well as the (U.K.'s) internal market, and recognizing the development of an independent trade policy by the United Kingdom beyond this economic partnership."
The aim, added the text, is for the EU and U.K. to create a "level of liberalization in trade in services well beyond" World Trade Organization rules.
In a speech to the House of Commons, also Thursday, Prime Minister Theresa May said: "The text we have now agreed would create a new free trade area with the EU, with no tariffs, fees, charges or quantitative restrictions."
In a statement Thursday, Chris Cummings, CEO of the Investment Association, which represents money managers in the U.K., said: "We are reassured by the aspiration for decisions on equivalence to be taken before the end of June 2020 and in a co-operative manner, which will help U.K. savers and investors to continue to find opportunities across the EU after Brexit. The focus must now be on ensuring this access is fair, transparent, and reliable."
Mr. Cummings added: "Crucially, we must not lose sight of the end goal: a final agreement that protects the interests of savers and investors by allowing the asset management industry to work seamlessly across borders."
