Tim Borrow, the United Kingdom’s ambassador to the European Union informed the office of Donald Tusk yesterday that Prime Minister Theresa May would wait until the last moment to trigger Article 50 of the Lisbon Treaty on March 29th. The Article 50 needs to be triggered before the end of the month to avoid additional complexity. After that date, the UK would need confirmation from at least 14 countries of the EU representing 65 percent of the total population of the bloc to exit. The pre-announcement of the date is partly aimed at preparing the financial markets to avoid unnecessary volatility surrounding the decision. The European council President Donald Tusk has said that within 48 hours of the UK’s triggering of Article 50, he will be presenting a draft Brexit guidelines to the 27 members of the EU.

While the financial markets are well aware of the triggering, we feel that the risk has not yet been priced properly, especially the risk that the EU might present the UK with an exit bill that could range from €40 billion to €60 billion. The triggering alone means nothing, the investors would have more clarity once the negotiating terms become clearer and that is not likely to happen before the next winter as all crucial European elections including that in Germany will be over by then. The pound is currently trading at 1.241 against the dollar.