* 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
(Recasts, adds new quote, details, updates prices)
By Jemima Kelly
LONDON, April 4 Sterling inched lower on
Tuesday, kept under pressure by uncertainty over the terms of
Britain's exit from the European Union, though some analysts
said the currency was becoming less sensitive to domestic
The pound's biggest moves were against the safe-haven yen,
falling 1 percent to a 12-week low of 137.12 yen as
the Japanese currency climbed across the board amid risk
aversion across markets.
Analysts said the broad fall in risk appetite was driven by
worries over an upcoming meeting between U.S. President Donald
Trump and Chinese President Xi Jinping and French elections
beginning at the end of the month.
For sterling, political risk has been in the driving seat
for nine months, with the currency losing around 17 percent
against the dollar since Britain's vote to leave the European
Union last June.
But some major banks have begun to say that the pound will
no longer rise and fall on the slightest development around
Brexit, now that two years of negotiations with the EU have been
"Does sterling want to trade off a running commentary on
Brexit? I think the answer is no," said UBS Wealth Management
currency strategist Geoffrey Yu, in London, adding that "Brexit
fatigue" had set in among investors.
"There’s only so much the market wants to monitor. We’re now
quibbling over $1.24, $1.25, but we’ve come down from $1.50, so
enough of a risk premium has been priced in already."
A parliamentary committee said on Tuesday that British Prime
Minister Theresa May must prove that "no deal is better than a
bad deal" by offering an economic assessment on the impact of
leaving the EU with no agreement.
Yu's comments echoed an April outlook from Japanese bank
MUFG, which argued that the pound had become less sensitive to
ING currency strategist Viraj Patel said markets were
focused more now on the outlook for the Bank of England,
suggesting investors had begun to rethink when the Bank might
raise interest rates from their record lows.
That rethink, he said, could explain sterling's weakness
over the past two days, when it has fallen almost 1 percent. It
was down 0.3 percent on Tuesday at $1.2450.
BoE Governor Mark Carney is set to give a speech on Friday,
while fellow Monetary Policy Committee (MPC) member Gertjan
Vlieghe speaks on Wednesday.
Markets moved last month to price in a chance of an interest
rate rise in the next year, after outgoing MPC member Kristin
Forbes unexpectedly voted for a hike.
But many economists say that despite accelerating inflation,
the central bank is unlikely to tighten monetary policy while
Britain is negotiating its exit from the EU in talks over the
next two years.
Sterling was down 0.1 percent at 85.61 pence per euro
(Editing by Susan Fenton)