The pound weakened 0.2 per cent against the euro and dipped against the dollar this morning as European Council President Donald Tusk revealed the European Union's negotiation strategy on Brexit.
The nine page document clarifies that Britain will need to settle its bill with the EU before entering into withdrawal talks, contrary to Theresa May's wishes outlined on Wednesday.
It has been sent to European leaders ahead of a summit of leaders in Brussels on April 29, and will act as a framework on which the European Commission can base its detailed negotiation stance over the next two years.
The guidelines discuss a possible two-stage negotiation strategy, in which Britain would have to fully withdraw from the EU before engaging in discussions about its future relationship with the trading bloc.
“An overall understanding on the framework for the future relationship could be identified during a second phase of the negotiations under Article 50.” "We must proceed according to a phased approach giving priority to an orderly withdrawal."
The document re-iterates that "the Unions will act as one" and that "there can be no cherry-picking"
Speaking to reporters in Malta, Mr Tusk said the 27 would proceed in a "spirit of co-operation".
The final version of the guidelines will not be approved until the summit next month, and an EU official told City A.M. they are likely to be "tweaked and changed" before then.
A Downing Street spokesman said: “These are draft guidelines and we look forward to beginning negotiations once they have been formally agreed by the 27 member states. It is clear both sides wish to approach these talks constructively, and as the Prime Minister said this week, wish to ensure a deep and special partnership between the UK and the European Union.”