GBP Jumps on Brexit Divorce Bill Breakthrough
- If ‘sufficient progress’ has been made, according to the EU, the UK can start trade agreement talks.
- The Northern Ireland border issue may still stymy discussions.
- Sterling now looking at multi-week highs and beyond.
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It seems that at last a breakthrough has been made in the UK/EU ‘divorce bill’ negotiations with the UK offering between EUR45 billion and EUR55 billion, depending on which source you read. What isn’t in doubt is that the markets are taking this positively and are pushing GBP higher against both the EUR and the USD as traders now expect Brexit talks to move forward to the second stage, including future trade agreements.
While refusing to comment on the numbers, UK Transport Minister Chris Grayling told the BBC,
“We want to leave as good friends, good neighbours, carry on trading with the European Union. It's right and proper that we meet our obligations and that's what we're intending to do."
The next important date for GBP is Monday December 4, when UK PM Theresa May meets European Commission President Jean-Claude Juncker. If the outcome of these talks are positive, the EU may decide to recommend moving forward to the second stage, a decision that would need to be ratified at the European Council meeting on December 14-15.
Before then, the thorny issue of the Northern Ireland border issue needs to be resolved with both sides seemingly wanting an agreement but both are, as yet, unwilling to compromise.
Chart: EURGBP One Hour Timeframe (November 24 – November 29, 2017)
Chart: EURGBP Daily Timeframe (July 19 – November 29, 2017)
EUR/GBP remains stuck in a wide trading range for the last 10-weeks as Brexit talks muddied the water and left longer-term trade decisions difficult to identify. On the downside, Fibonacci retracement levels at 0.88100 and 0.86930 are likely targets if talks progress.
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--- Written by Nick Cawley, Analyst
To contact Nick, email him at email@example.com
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.