Funda and political wrap: positive vibes from Brexit progress

From a fundamental and political perspective today, the key noise came with the UK and EU agreeing on terms of a transition deal out to December 2020. This sent the pound higher across the board, extending its gains above the key descending resistance line that was first pierced 12th MAcrh, closing on a daily basis above it now ever since. Markets now await to see if this gets the seal of approval from EU heads of state at the EU Summit later this week.

However, while this is progress, much still needs to be done in terms of reaching an agreement over the Northern Ireland border. Analysts at ANZ argued that talks on the UK’s future arrangement with the EU will be difficult, but progress towards any sort of certainty is good news for UK business and growth. "The question for FX markets now is whether estimates of GBP's perceived equilibrium value will rise. Short term, positive political reports would suggest the balance of risks is that they may, despite the fact that trade talks have yet to start. For what it’s worth, we estimate GBP is around 10-15% undervalued vs USD," the analysts added.

• Brexit negotiations and recent agreements fueling a bid in the pound explained - ING
• EUR/GBP: profit taking in play, 0.8740 needs to break for a ten-day continuation
• GBP/USD: 1.4050 is key on this Brexit noise spike, if not, where next?

Other key headlines from US session: (Sources, Forexlive, Politico, RRTS, Livesquawk, WSJ, NYT, WP)

Central Banks

• China's New PBoC Chief Promises To Enact Changes Quickly – WSJ.
• BoJ’s Kuroda: Not Expecting Protectionism To Spread.
• BofAML Survey: ECB Seen Holding Policy Rates Until 2019, Not Expecting Rate Hikes Until At Least 2020.
• - ECB, BoJ Seen Lagging About 3-Yrs Behind Fed In Policy Normal As Inflation In Europe, Japan Will Likely Remain Below Target.
• BoJ’s Kuroda: Monitoring Trade Policies.
• ECB Debate Shifting To Interest Rate Path From QE.
• BoJ Gov Kuroda: G20 Likely To Agree On Importance Of Free Trade.
• ECB's Mersch: Economic Recovery Is Doing Better Than Expected.
• ECB's Jazbec To Step Down - ForexLive.
• ECB's Mersch: Can Slowly Reduce QE Buying And Keep Easy Policy Stance.
• ECB's Mersch: All Prerequisites For A Sustainable Adjustment Of Inflation To Our Goal Are Given – RTRS.
• UK And EU Agree 'Decisive Step' With 21-Month Brexit Transition.

White House/ Trade wars

• White House Spokesman: Trump Is Not Moving To Fire Special Counsel Robert Mueller But Is Frustrated By Ongoing Investigation – RTRS.
• German Economy Minister Altmaier After Talks With US Commerce Secretary Ross: We Both Think A Solution To Planned Tariffs On Steel And Aluminium.
• Senior US Treasury Official: Trump Believes In Free Trade But Mnuchin Making Clear At G20 Meeting That US Won't Subordinate National Interests To Make Free Trade System Work – RTRS.
• White House Taps Kushner Ally Liddell As Deputy Chief For Policy.
• US Said To Ask EU To Meet 5 Conditions To Waive Tariffs.
• President Trump Supports Health Subsidies In Budget Bill.
• President Trump Close To Hiring Longtime Washington Lawyer Joe diGenova – NYT.
• US Pres. Trump Tells Senate Republicans He Supports Health Subsidies In Budget Bill – WP.
• Canadian PM Trudeau: US Pres. Trump Seems ‘Enthusiastic’ About Getting NAFTA Deal.
• White House Chief Of Staff Kelly To Tap Kushner Ally Chris Liddell As Deputy Chief For Policy – Politico.
• S.Korean FinMin Kim Said To Have Asked US Tsy Sec. Mnuchin For Exemption On Steel Tariffs.

European politics

• Italian President: To Allow Months For Coalition Talks.
• Italian President Is Ready To Allow Months For Coalition Talks.
• UK PM May: No Other Conclusion Other Than Russia Is Responsible For Russian Spy Poisoning.

Brexit

• KPMG's Brexit Chief: Until We Have Legal Certainty, Our Clients Will Continue To Take Action To Prepare Themselves For A ‘No-Deal’ Scenario.
• CBI: Brexit Transition Deal Delivers Gift Of Time And Victory For Common Sense.
• UK PM May's Spokesman: PM Pleased We’ve Made More Progress On EU Negotiations, Giving Business And Citizens More Certainty To Trade On Same Terms As Now - RTRS;
• - Asked Whether Britain Had Sold Out Over Transition, It’s A Negotiation With Give And Take On Both Sides, Britain Has Won Movement From EU On Several Issues;
• - Both Sides Need More Talks To Find Agreement Over Future Border With Eu Member Ireland After Brexit;
• - Both Sides Committed And Confident Of Reaching Overall Brexit Agreement;
• - Britain From 2020 Will Negotiate On Fishing As An Independent Coastal State.
• EU’s Verhofstadt: Progress Made In Brexit Talks, European Parliament To Have Final Say.
• UK PM May Expresses Support For Draft Brexit Agreement.
• Irish PM's Spokesman: EU Leaders Will Decide On Friday If Enough Progress Has Been Made To Move On To The Issue Of The Future Relationship.
• Irish PM's Spokesman: Northern Ireland Brexit Border Backstop Agreement ‘Is As Legally Firm As The Government Said It Would Be In December';
• -  Backstop Applies Unless And Until Something Better Is Agreed.

Oil

• Oil Prices Head Lower, But Saudi-Iran Tensions Keep A Floor In.
• OPEC, Non-OPEC Committee To See Record Compliance Level In February.
• OPEC & Azerbaijan To Discuss Deepening Cooperation – RTRS Sources;
• - To Discuss Possibility Of Azerbaijan Becoming A Member Of OPEC.
• UAE Energy Min: Oil Cuts To Continue Until The End of 2018.