According to analysts at Danske Bank, while the EU wants to settle the divorce bill first before discussing the future relationship, the UK wants to discuss both simultaneously –we are likely to see negotiations about how to negotiate at the beginning and the risk of ‘no deal’ seems to be the highest here.
Key Quotes
“The UK and EU will probably have to negotiate about how to negotiate after the triggering of Article 50. Due to the ratification process, a deal (or at least a transitional deal) has to be reached by October 2018 the latest.”
“The UK is set to leave the single market and the custom union, as staying within means it cannot make free trade deals with other countries.”
“It is unlikely that a full deal can be reached within the two years of negotiations so the UK and EU are likely to agree on a transitional phase, especially for exposed industries such as autos, agriculture and financial services.”
“The UK has ruled out contributing significantly to the EU budget, which may create tensions among EU27, as the UK is one of the biggest net contributors to the EU budget. This is one of the UK’s best negotiation weapons.”
“In our base case, the final deal will be something similar to the EU-Canada CETA deal, which reduces/removes trade barriers for goods but remains weak on service. The UK is set to lose passport rights for banks.”
“Risk of a so-called ‘cliff edge’ Brexit with no agreement has increased, as May has said that ‘no deal is better than a bad deal’. We think that the risk is highest at the beginning of the negotiations due to disagreement on the ‘divorce’ bill.”
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers. The author will not be held responsible for information that is found at the end of links posted on this page.
If not otherwise explicitly mentioned in the body of the article, at the time of writing, the author has no position in any stock mentioned in this article and no business relationship with any company mentioned. The author has not received compensation for writing this article, other than from FXStreet.
FXStreet and the author do not provide personalized recommendations. The author makes no representations as to the accuracy, completeness, or suitability of this information. FXStreet and the author will not be liable for any errors, omissions or any losses, injuries or damages arising from this information and its display or use. Errors and omissions excepted.
The author and FXStreet are not registered investment advisors and nothing in this article is intended to be investment advice.
Recommended content
Editors’ Picks
EUR/USD clings to daily gains above 1.0650
EUR/USD gained traction and turned positive on the day above 1.0650. The improvement seen in risk mood following the earlier flight to safety weighs on the US Dollar ahead of the weekend and helps the pair push higher.
GBP/USD recovers toward 1.2450 after UK Retail Sales data
GBP/USD reversed its direction and advanced to the 1.2450 area after touching a fresh multi-month low below 1.2400 in the Asian session. The positive shift seen in risk mood on easing fears over a deepening Iran-Israel conflict supports the pair.
Gold holds steady at around $2,380 following earlier spike
Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
Bitcoin Weekly Forecast: BTC post-halving rally could be partially priced in Premium
Bitcoin price shows no signs of directional bias while it holds above $60,000. The fourth BTC halving is partially priced in, according to Deutsche Bank’s research.
Geopolitics once again take centre stage, as UK Retail Sales wither
Nearly a week to the day when Iran sent drones and missiles into Israel, Israel has retaliated and sent a missile into Iran. The initial reports caused a large uptick in the oil price.