* Graphic: sterling and gilt yields bit.ly/2dgAXn1
* Graphic: World FX rates in 2017 tmsnrt.rs/2egbfVh
* Graphic: Trade-weighted sterling since Brexit vote tmsnrt.rs/2hwV9Hv
(Updates prices, adds details, stocks moves)
By Jemima Kelly
LONDON, March 29 Sterling slipped against the
dollar after a choppy day of trading on Wednesday, receiving no
clear direction from Britain's formal triggering of its exit
from the European Union.
Prime Minister Theresa May began Britain's divorce procedure
from the EU earlier in the day, declaring there was no turning
back and ushering in a tortuous process that will test the
bloc's cohesion and pitch her country into the unknown.
The pound had touched an eight-day low of $1.2377
in Asian trading, before bouncing back to trade as high as
$1.2478 after the confirmation that the EU's Article 50 - which
kickstarts two years of negotiations between Britain and the
bloc - had been triggered.
By 1550 GMT, though, sterling had slipped back to $1.2403
, leaving it down a third of a percent on the day and in
the middle of the $1.20-$1.28 range it has broadly traded in
over the past six months.
"I think we'll continue to trade sideways until we get
greater clarity on the European Union’s negotiating stance,"
said Societe Generale currency strategist Alvin Tan.
May's six-page Brexit letter to European Council President
Donald Tusk set a positive tone for the approaching talks,
though it admitted that reaching a comprehensive Brexit
agreement within two years would be a challenge.
Within 48 hours, Tusk will send the 27 other EU member
states draft negotiating guidelines and they will later meet in
Brussels to discuss the situation.
Tusk told reporters on Wednesday that the EU's goal was to
minimise the costs for EU citizens, businesses and member
states, whose leaders should adopt the negotiating proposals on
"The triggering of Article 50 was well anticipated, but the
fact negotiations are now live means financial markets may
become more vulnerable to commentary from European and/or UK
officials as to how well - or poorly - the initial discussions
are going," said Michael Metcalfe, global head of macro strategy
for State Street Global Markets.
"Headline risk is back, if it ever really went away."
Britain's blue-chip FTSE 100 stock index - most of
whose components get their earnings in foreign currencies -
gained 0.4 percent as sterling fell.
Most analysts said the key driver for sterling over the
coming months would be how negotiations with the EU play out,
and the health of the British economy going forward.
The head of global bonds at the world's largest asset
manager, BlackRock, said on Wednesday that he remains invested
in the British pound, though he has concerns over the timeline
for Brexit negotiations.
Sterling had hit an eight-week high at the start of this
week as investors unwound record-high short positions against
the currency, and brought forward their expectations for when
the Bank of England might begin to tighten monetary policy amid
rapidly accelerating inflation in Britain.
"Given the positioning, our bias would still be toward a
stronger pound over the coming weeks," said Derek Halpenny,
MUFG's European head of global markets research in London.
Against a weaker euro, the pound rose 0.3 percent to 86.60
pence, having earlier hit a 12-day low of 87.35
pence. The euro dropped sharply after sources told Reuters that
European Central Bank policymakers are wary of making any new
change to their policy message in April.
(Editing by Mark Heinrich)