* 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
By Ritvik Carvalho
LONDON, March 24 Sterling fell against the
dollar and euro on Friday, retreating from the previous
session's one-month highs, as investors braced for Britain's
beginning the formal process of leaving the European Union next
An interview with Bank of England policymaker Gertjan
Vlieghe in The Times also laid out the argument for the Bank
looking through further rises in inflation over the next few
months in aid of supporting the economy.
Strong inflation and retail sales data have added to
expectations the Bank of England might lean towards supporting
sterling with higher interest rates over the next year, pushing
the pound 1 percent higher against the dollar this week.
But investors worry that Prime Minister Theresa May's
invoking Article 50 next Wednesday may trigger a period of
political jousting with its EU partners that will lay bare the
scale of the risks to the economy from 18 months of talks.
Sterling dipped 0.3 percent to $1.2484 in morning
trade in London and was 0.4 percent lower at 86.47 pence per
"Uncertainty (surrounding Brexit) remains intact," said
Credit Agricole currency strategist Manuel Oliveri.
"Rate expectations are unlikely to rise because the BoE is
linking its monetary policy stance to this uncertainty, and
that's why we don't believe sterling has more upside from
Since minutes from the Bank of England's meeting last week
showed a number of monetary committee members close to voting
for a rise in rates, signals from official have been mixed.
Asked about Tuesday's inflation data, BoE governor Mark
Carney said it was important not to overreact to a single data
Deputy Governor Ben Broadbent on Thursday said it was
possible interest rates would rise, but also highlighted a
strong sense of caution among investors about the outlook for
Britain after Brexit.
Policymaker Gertjan Vlieghe believes a rise in inflation to
more than 3 percent might not prompt him to consider raising
interest rates because the increase would probably be temporary,
The Times newspaper reported on Friday.
(Reporting by Ritvik Carvalho, editing by Larry King)