Deal or No Deal

Brexit negotiations have been ongoing for some months now, and even while officials state that ‘sufficient progress’ in the talks has been made, the public are still unaware of what the details of said progress are. This week Theresa May was in Brussels and it was expected that here a deal would be agreed upon, with key issues worked out before talks would then move to trade and transition. However, a deal was not settled, as the Democratic Unionist Party did not agree with the proposed deal after discovering it would prevent Northern Ireland from leaving the European Union on the same terms as the rest of the United Kingdom.
What happens next?
As a deal was not agreed, time is running out before the European Council meeting, which is to be held on December 14^th-15^th. Theresa May will be hoping a deal can be made before the meeting and will be returning to Brussels at some point this week to push a deal through. It looks like the main issue is the Irish border between Ireland and Northern Ireland; no one wants a hard border between the two nations, as it would undermine the 1998 peace accord that ended 30 years of violence in the region, making it vital a deal is agreed on the matter. If not, it will hard to see Brexit talks moving to the next phase. A transition deal should be made by October 2018; if not, the United Kingdom may crash out of the European Union without a deal – a disastrous scenario.
Financial Markets
It was highly anticipated a deal would be agreed between the two sides this week and we saw the Pound leaping higher against the major currencies. However, as the news of a no deal broke out, we saw the Pound drop against the US Dollar and the Euro. However, the Pound is up at around 10% against the US Dollar since beginning of 2017 but further development will certainly influence the Cable.
 
GBPUSD:

Source: GO Markets 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: GO Markets 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: GO Markets MT4