UK/EU transition deal boosts GBP, US..........>

FOREX: UK/EU transition deal boosts GBP, US equites in the red

- GBP outperformed after the UK and EU agreed a large part of terms for the

Brexit transitional period. Gbp/Usd lifted 75 pips to react highs of $1.4088,

but later gave back gains to hold $1.4040/50. Eur/Gbp was pressured to near

2-month lows of Gbp0.8745, later closed at Gbp0.8785 (London 1700GMT) and has

now fallen 9 days in a row for only 2nd time in the history of the EUR. 

- Eur/Usd spiked through $1.23 to $1.2325 after the Reuters ECB sources story

that stated the ECB debate is shifting to the steepness of the rate path and

policy makers are comfortable with forecasts for a rate hike by mid-2019. Profit

take sales eased, before fresh dip buyers emerged with a move to $1.2359.

- Usd/Jpy gains were capped ahead of Y106.10 as US equities struggled across the

board

- Despite moderate gains in oil & gold prices, AUD failed to benefit and held

near the peak of its narrow 40 pip range

- Main focus tomorrow on UK CPI data (0930GMT). Core CPI is expected to slow to

2.5% on base effects from transport and food. German ZEW follows at 1000GMT.