Earlier this month, the UK and European Union reached an important milestone in Brexit negotiations, with the latter deeming that sufficient progress had been made to move the discussion on to the future relationship.
This comes 18 months after the UK voted to leave the EU and almost nine months after article 50 was triggered - officially starting the process – highlighting the snail's pace that the process has so far moved at and offering little hope that an agreement on the future relationship can be wrapped up by this time next year.
An agreement on the financial settlement, citizens' rights and the Irish border – the three issues the EU insisted must be resolved before trade talks could begin – at times looked unachievable, leading to speculation that talks may collapse before phase two even got underway, or that Theresa May could be ousted by frustrated Brexiteers in her own government.
While an eleventh hour deal was agreed – subject to approval by the European Council on Friday (8 December) – the response to the deal was more one of relief or even scepticism rather than optimism.
If phase one took this long to conclude, what hope do we possibly have that phase two can be completed in the next 12 months? Especially when the Irish border issue has been kicked down the road, rather than resolved.
What's more, Brexit Secretary David Davis' claim over the weekend that the agreement was more a statement of intent than a legally enforceable thing, will do nothing to build trust between the UK and EU ahead of trade talks. As it stands, the comments don't appear to have jeopardised the European Council's vote, but efforts will now be made to make it enforceable.
As far as markets are concerned, the agreement was a positive step forward but not something to get carried away with. The pound hit a seven-month high – on a trade weighted basis – but the gains were short-lived and it is currently on course for a third consecutive intraday decline.
Of course, some of this is going to be a classic case of "buy the rumour, sell the fact", where traders buy something on the growing expectation of a positive outcome then lock in profits (sell) once it's confirmed.
However, the fact that the gains so far have been fairly modest suggest the conclusion of phase one has not attracted the kind of optimism one may have expected. The fudged nature of it and above comments from Davis clearly won't have helped matters.
The next phase of negotiations will now begin at the turn of the year, with the two-year transition being a priority for the UK. Trade talks will likely continue to take a back seat for the EU, particularly if a transition is agreed, with other aspects of the divorce taking priority, including ironing out the details of those issues already discussed.
The next 12 months is likely to strongly resemble the last nine, which means more frustrating negotiations, slow progress and through the night talks as the deadline approaches.
A trade deal can't be signed until the UK has officially left the EU, which if the government gets its way will be signed into law for March next year, meaning much of the work will likely be done during the transition.
One thing seems clear, the drama that has engulfed negotiations over the last 12 months is unlikely to go away. Theresa May's position at home is borderline untenable and should she still be Prime Minister in March 2019, it will be quite an incredible achievement.
Her majority is being propped up by the DUP after a disastrous campaign and every day it seems one of her colleagues vying for her job is preparing to stab her in the back. Should this happen and she be replaced by a more fierce Brexiteer, negotiations could take a sudden turn for the worse.
As far as markets are concerned, we could see the pound gradually pare back its post-referendum declines over this period, assuming negotiations go to plan.
The FTSE has performed extremely well since bottoming in the days after the referendum – up around 30% at the time of writing – which has been strongly supported by the weaker pound as companies in the index make a huge proportion of their profits abroad.
If the pound does recover over the next year or two, this may therefore be a headwind for the FTSE and contribute to it underperforming its peers.
Craig Erlam is senior market analyst at foreign exchange and financial services provider OANDA, a company he joined in 2015. With years' of experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary.