LONDON Oct 13 Sterling was near a record low in
trade-weighted terms on Thursday as focus turned to the High
Court which will hear a legal bid to force the British
government to seek parliamentary approval to trigger the formal
After a steep sell-off in the last two weeks caused by
uncertainty over Brexit, the pound surged as much as 1.5 percent
against the dollar and the euro on Wednesday after British Prime
Minister Theresa May said she would allow lawmakers some
scrutiny over the process.
May had drawn the ire of many in parliament for refusing to
divulge her strategy and saying she would trigger Article 50,
which sets off the formal departure process, without giving
lawmakers a say.
Markets were also relieved to hear her say that she would
seek "maximum possible access" to Europe's single market.
But the pound gave up some of its gains later on Wednesday
after May and her Brexit minister, David Davis, appeared less
concessionary in parliament. May also said parliament will not
vote on triggering Article 50.
Traders said considerable certainty was prompting investors
to stay clear of the currency.
A second hearing in the legal challenge against the
government for its stance on Article 50, led by pro-EU
investment fund manager, will take place at the High Court on
Monday, but it is not clear when a final decision will be made.
Investors fear Brexit could hurt trade and foreign
investment needed to fund Britain's huge current account
deficit, one of the biggest in the developed world.
"This suggests there will be heightened uncertainty around
the pound," said a spot trader at an European bank, adding that
the spectre of a "hard Brexit" - where Britain leaves the EU's
single market - was likely to see sterling weaken further.
Sterling was down 0.4 percent at $1.2160, having
tumbled to $1.2086 on Tuesday when it appeared to be heading
back towards a 31-year low of $1.1450 hit on Friday. The euro
too was up 0.4 percent at 90.50 pence
On a trade-weighted basis, sterling was down 0.15 percent at
73.7, not far from a record low of 73.383 struck on Tuesday.
Sterling has shed 18 percent against the dollar since
Britain's shock vote in June to leave the European Union.
In a sign that the drop in the pound is likely to push up
inflation and hurt consumer spending, Britain's biggest retailer
Tesco pulled dozens of Unilever brands from
its website in a row over pricing sparked by the Brexit-induced
plunge in the pound.
"The current situation is anything but stable and another
slide (in the pound) would feed concerns far more than it would
help the UK's competitive position," said Kit Juckes, macro
strategist at Societe Generale. "And so, it's worth remaining
short sterling against both the dollar and the euro."
(Reporting by Anirban Nag; Editing by Raissa Kasolowsky)