LONDON (Reuters) - Sterling hit the day’s high on Wednesday in volatile trade while shares in British companies slipped after British Prime Minister Theresa May and European Council President Donald Tusk said Britain had formally triggered its divorce from the EU.
May’s letter to Tusk, which she quoted from to parliament on Wednesday, said Britain and the EU must work together to minimise disruption and provide as much certainty as possible, and that a deep, special partnership was in the best interests of both sides.
Having earlier hit an eight-day low of $1.2377, sterling jumped to $1.2478 after it was confirmed that the letter had been sent, up from around $1.2448 beforehand and leaving the currency up 0.2 percent on the day.
“I think this is largely attributed to reducing one element of uncertainty in the process of actually triggering Article 50 but also the conciliatory tone in Prime Minister May’s statement...focusing on the partnership with the EU and achieving a mutually beneficial relationship,” said Alexandra Russell-Oliver, a currency analyst at Caxton FX.
Sterling also hit day’s highs against the euro.
Britain’s FTSE 100 index - most of whose earnings are denominated in other currencies - hit a session low after May triggered Article 50, down 0.3 percent.
British mid-caps also fell, down 0.1 percent.
British governent bond futures drifted higher, tracking German Bunds, to touch a session high around 20 ticks up from Tuesday’s close.
Reporting by Jemima Kelly; Additional reporting by Ritvik Carvalho, Kit Rees and David Milliken