Nima

Director of Client Relationships Responsible for the management & development of the easyMarkets client base as well the development of our IB partner program.

Brexit talks made the United Kingdom’s path out of the European Union (EU) murkier this week, as lawmakers disagreed on the amount London will pay to leave the Single Market.

EU negotiator Michel Barnier has criticized the U.K. for not being transparent enough on its payment commitment, claiming that it was hampering progress.

“We require this clarification on the financial settlement, on citizens’ rights, on Ireland – with the two key points of the common travel area and the Good Friday Agreement – and the other separation issues where this week’s experience has quite simply shown we make better progress where our respective positions are clear.” Barnier said, as quoted by the BBC.

Brexit Secretary David Davis said the negotiations were progressing in a positive fashion, but that both sides need to show greater “flexibility” in reaching a desirable outcome.[1]

British pound resilient to Brexit talks

Brexit negotiations officially began last month following the U.K. snap election. The loss of a Tory majority in the House of Commons signaled renewed skepticism over a so-called “Hard Brexit,” something Prime Minister Theresa May has been vowing since the fall. The disappointing election result suggests that the government will soften its stance during the divorce proceedings.

The British pound has been surprisingly resilient in the face of Brexit obstacles, although most of its recent advances have been attributed to a weaker dollar. Sterling approached 1.31 USD last week – its highest since September. It has since fallen back below the 1.30 level.

Outlook of the pound dim due to Brexit

Despite recent gains, the pound’s outlook remains negative amid growing uncertainty over the U.K.’s economic future. Several sticking points between the EU and U.K. remain, including the rights of employees of EU-based companies. The right of EU citizens to participate in U.K. local elections is another source of dispute between the two sides.

“I know one has to compromise in negotiations but we are not there yet. When I say, and I think I was very clear and transparent about that, that there are things that are inseparable from others. That’s the financial settlement,” Barnier said following latest negotiations with his British counterpart.[2]

Brexit talks are expected to continue for at least two years.

[1] BBC.com (20 July 2017). “Brexit: UK and EU at odds over ‘exit bill’.”

[2] BBC.com (20 July 2017). “Brexit: UK and EU at odds over ‘exit bill’.”

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