GBP Needs an Answer to the Brexit Timetable Question
- Theresa May will hope that the UK’s upwardly revised divorce bill offer will open the door for trade talks.
- Any set-back at today’s meeting could see Sterling fall sharply.
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UK PM Theresa May will today meet EU Commission President Jean-Claude Juncker for a working lunch to try and break the current Brexit impasse and move talks forward. The UK has upped its original divorce bill offer to between EUR 40 - 50 billionin an effort to progress talks to the second stage, including post-Brexit trade agreements. If ‘sufficient progress’ has been made, Juncker is likely to recommend that talks can progress when the EU Council meets on December 15. However, while the EU may agree on the financial settlement, they will still want to see more progress on the Northern Ireland border issue, an area where talks remain delicately balanced.
Sterling has had a good run in the last couple of weeks on the back of the revised financial offer as traders bet that talks move forward. Since the revised offer leaked into the media, GBP has pushed higher against both the single currency and the US Dollar, further clawing back some more of its post-referendum losses. A positive outcome from today’s meeting, and a recommendation on December 15, will see GBP push further ahead, with the recent EUR/GBP multi-month low around 0.87300 vulnerable. However, as always when markets pre-price news, disappointment can cause a sharp reversal and this may leave Sterling vulnerable at current levels.
Chart: EURGBP Daily Timeframe (October 23 – December 4, 2017)
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--- Written by Nick Cawley, Analyst
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DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.