Implicitly if not in prolog indicated otherwise, eg.
<?xml version="1.0"
encoding="Windows-1250"?>
UTF-8 or UTF-16 is used.
The distinction between UTF-8 and UTF-16 is done according to the first two bytes of the document entity (ie. file), by so-called byte-order-mark xFFFE.
If not present, UTF-8 is assumed, thus UTF-8 is the implicit encoding of UNICODE in XML.