There's white smoke! - Bank of Ireland Corporate

There’s white smoke this morning as the EU and the UK reach agreement on the Irish Border issue, allowing the EU Commission to say it is recommending to the EU Council, which meets next week, that ‘sufficient progress’ has been made in phase one of the Brexit negotiations to move to phase two. The latter will discuss a new EU-UK trading relationship and a possible transition period to that new relationship

Not surprisingly, sterling has risen in response and is currently trading at just under 87p against the euro and at $1.35 against the dollar. UK bond yields have also risen – 10-year yields are up around 6bps at the open – as the market assesses the possible implications of this morning’s developments for monetary policy (e.g. is the Bank of England now more likely to raise interest rates over the coming months, particularly if a transition period is agreed?)

Elsewhere, the euro is continuing to lose ground against the dollar and currently stands at just under $1.1750, down from over $1.19 at the end of last week (though still well within the range of around $1.15 to $1.21 that has prevailed over the past few months

The Euro area economy grew by 0.6% q-o-q in the third quarter of the year and by 2.6% on an annual basis, the latter revised up a touch from 2.5% and the fastest pace of growth in more than 6 years

The US employment report for November is published today, with the consensus expecting job gains of 195,000, the unemployment rate to remain at 4.1%, and annual earnings growth to pick up to 2.7%

Other data due include industrial production and trade in the UK