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Brexit Briefing: UK Questioning the EU's Divorce Demands

Brexit Briefing: UK Questioning the EU's Divorce Demands

Nick Cawley, Strategist

Talking Points

- The UK Brexit negotiators are demanding detailed information on the EU’s divorce bill.

- EURGBP looking to ECB for fresh impetus.

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In a sign of things to come, UK Brexit negotiators are demanding detailed explanations of the proposed EU divorce bill, adding pressure to an already tense situation. While the EU is looking for up to EUR100 billion to cover the UK’s financial obligations, according to recent reports, the UK is not yet putting forward a counter-proposal. UK Brexit negotiator in chief David Davis however did acknowledge last week that the UK did have financial obligations but refused to put a number on them.

Recent reports suggest that the UK hopes by agreeing to the principle that the UK has to pay monies over to the EU for past and ongoing obligations, that trade talks may start as soon as possible while the divorce bill numbers are being crunched. A further three rounds of talks are scheduled over August, September and October before an EU Summit in late-October. If EU leaders believe at the Summit that sufficient progress has been made by then on subjects including the divorce bill, EU and UK nationals’ rights and the Northern Ireland border, trade talks will likely commence.

While the talks continue EURGBP may struggle to break out from its current range, although Thursday’s ECB meeting may give the single-currency a boost if President Mario Draghi indicates that monetary policy may be tightened in the upcoming months. While all monetary levers are expected to be left untouched, any hawkish shifting of the accompanying ECB statement may push EURGBP back towards the July 12 high of 0.89498.

For live coverage of the ECB Rate Decision, join DailyFX senior currency strategist @CVecchioFX here

Chart: EURGBP Daily Timeframe (March 24 – July 19, 2017)

Brexit Briefing: UK Questioning the EU's Divorce Demands

Chart by IG

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And if you are looking at EUR or GBP, here are a few important times to note on Thursday July 20.

Economic Calendar

Brexit Briefing: UK Questioning the EU's Divorce Demands

Markets

Index / Exchange Rate

Change (Exchange Hours/GMT Session Rollover)

Market Close/Last

FTSE 100

+0.13%

7,400

DAX

+0.01%

12,432

GBP/USD

-0.11%

1.30250

EUR/USD

-0.19%

1.15320

EUR/GBP

-0.07%

0.88535

--- Written by Nick Cawley, Analyst

To contact Nick, email him at nicholas.cawley@ig.com

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