The Great British Pound has been the top performer amongst the majors overnight, appreciating 1.2% to above 1.3. The gains were moderated late in the piece however with the Australian open pricing GBP to USD at 1.2962.
Brexit dominated all market movements for the Sterling overnight after reports that the UK and EU have provisionally agreed to the text on the Brexit withdrawal agreement. While the text itself has been settled, the Financial Times reports that the negotiations will continue over the coming days if political objections are raised by London or EU member states. The UK Cabinet will reportedly meet tonight to discuss the agreement and Prime Minister May is set to canvas each sitting Cabinet member individually throughout the day. Headlines report that PM May wouldn’t call a meeting unless she was confident she could win Cabinet support. While far from a done deal, Brexit headlines remain positive which has seen a marked improvement in the Sterling.
Domestically the economic calendar also buoyed the Pound with UK wage growth coming in slightly stronger than expected. While wage growth grew to its highest level in nearly a decade, the unemployment rate did tick higher, tempering market optimism. Nevertheless, it does provide some impetus for the Bank of England to further hike rates in the future.
Moving into Wednesday the Pound will keep all attention on on-going Brexit headlines. UK CPI, RPI and PPI are also set for release later in the day.