- Sterling declines the most in two weeks versus dollar
- Pound approaches weakest level in three years against euro
The pound dropped the most in two weeks as Prime Minister Theresa May was said to be leaning toward the first part of 2017 as the best moment to trigger the start of formal talks over the U.K.’s withdrawal from the European Union.
Sterling fell against 13 of its 16 major peers, paring a weekly advance against the dollar. While reports in the U.K. media recently suggested May could wait until the end of 2017 before opening two years of negotiations through triggering Article 50, she is sympathetic to the case for acting by April at the latest as Germany and France prepare for elections and pro-Brexit campaigners at home warn against delay, said the officials, who asked not to be named discussing private conversations.
“There appears to be some knee-jerk selling,” said Lee Hardman, a foreign-exchange strategist in London at Bank of Tokyo-Mitsubishi UFJ Ltd. “The market view is probably that it being triggered sooner may make a harder Brexit more likely. You could argue alternatively that receiving clarity over U.K.’s future relationship sooner would be a positive development.”
The pound fell 0.8 percent to $1.3063 as of 4:54 p.m. London time, the steepest decline since Aug. 4. It dropped to a 31-year low of $1.2798 on July 6. Sterling depreciated 0.6 percent to 86.71 pence per euro, having reached 87.25 on Aug. 16, the weakest level in three years.
The report tempered a week that saw the pound recover versus the U.S. currency. Sterling still posted a weekly gain after reports showed July inflation, retail sales and jobless claims beat analysts’ forecasts, suggesting a more optimistic picture of the post-Brexit economy.
Sterling has dropped more than 12 percent against the dollar since Britain’s referendum on June 23. The pound had its worst-ever day versus the U.S. currency when the result became clear a day later, while losses deepened after the Bank of England’s decision this month to cut interest rates by a quarter-point and boost its stimulus plan.