LONDON, Feb 28, Reuters The pound edged up on Tuesday, drawing some strength from Britain39;s agreement with the European Union on postBrexit trade, but it was still heading towards its largest monthly loss against the dollar since September.

British Prime Minister Rishi Sunak struck a deal with the European Union on Monday to ease restrictions on trade between Northern Ireland and Britain, and to give lawmakers on the ground a greater say over the rules and regulations they follow from Brussels.

The deal seeks to resolve the tensions caused by the Northern Ireland protocol, a complex agreement that set the trading rules for the Britishgoverned region that London agreed before it left the EU but now says are unworkable.

The pound rose by as much as 1.1 against the dollar and gained 0.5 against the euro after Sunak39;s announcement.

The cost of insuring British government debt against default dropped to its lowest in three weeks on Tuesday and was only narrowly above January39;s fivemonth lows, reflecting greater investor confidence.

Sterling was up 0.2 against the dollar at 1.2086 and up 0.2 against the euro with one euro at 87.79 pence.

But analysts said that any boost from the newly minted postBrexit rules would likely not last, given the economic outlook.

The central bank story should instead remain the most central driver of sterling, and given the lack of data today, markets will watch three Bank of England speakers today Jon Cunliffe, Huw Pill and Catherine…