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* Sterling within half a U.S. cent of 31-year low
* PM May says divorce process to begin by March
* Deadline seen removing any lingering doubts Brexit will
By Jemima Kelly
LONDON, Oct 3 Sterling slid to a three-year low
against the euro and a three-month low versus the dollar on
Monday, after a March deadline was set for the start of the
formal process that will split Britain from the European Union.
Britain's Prime Minister Theresa May told her Conservative
party's annual conference on Sunday that she was determined to
move on with the process and win the "right deal", in a move to
ease fears inside her party that she may delay the divorce.
Triggering Article 50 of the EU's Lisbon Treaty will give
Britain a two-year period to clinch one of the most complex
deals in Europe since World War Two, and will redefine the
country's ties with its biggest trading partner.
Sterling, having just posted its worst run of quarterly
losses since 1984, skidded more than 1 percent against the
dollar to $1.2845. That left it less than half a cent
away from the 31-year low it plumbed in early July, shortly
after the shock June 23 vote to leave the EU.
The pound also shed 1 percent against the euro to hit 87.48
pence, its weakest since August 2013.
"The fact that May has confirmed the timings for the
triggering of Article 50 took away any lingering doubts and any
lingering supportive elements for the currency, whereby...we
could pretend nothing was going on," said UBS Wealth Management
currency strategist Geoffrey Yu.
"Markets are fundamentally seeing Brexit as negative for the
pound... and now we know it's definitely going to happen,
there's more short-term or medium-term risk for the currency,
but how it's really going to play out remains to be seen."
Yu added that sterling's performance over the coming months
would be determined by whether it looked as if Britain would
undergo a "hard Brexit" - a total split from the EU and its
single market that some fear could drive an exodus of banks from
Forecasts for the pound after the vote were almost
universally bleak. A number of major banks predicted a fall to
around $1.20, levels not seen since the Plaza Accord's move to
weaken the dollar in the mid-1980s, but it has so far held up
better than that, bottoming out in early July at $1.2798.
"From (May's) comments it appears that next year it is going
to be very volatile and the British currency may face a large
move on any given day especially when it comes to conceptions
and translations about Brexit," said Think Forex analyst Naeem
"A harder Brexit may punish the currency more, and if the
economic data starts to fall off the cliff, it may actually push
the politicians to strike for a softer Brexit."
DEUTSCHE BANK SETTLEMENT
Elsewhere, risk sentiment benefited from news that Deutsche
Bank was attempting to negotiate a much smaller fine with the
U.S. Department of Justice, though no formal settlement has been
The DOJ fined Germany's largest bank $14 billion earlier in
September for what it alleged were sales of toxic
"I think the Deutsche headline risk is still there. It's not
finished yet, with many things yet to be revealed," said Kaneo
Ogino, director at foreign exchange research firm Global-info Co
in Tokyo. "Cross your fingers that this rangebound trade
The euro edged down 0.1 percent to $1.1237, remaining
well above Friday's low of $1.1153 hit before hopes of a reduced
Deutsche settlement pulled it higher.
For Reuters new Live Markets blog on European and UK stock
markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets
(Additional reporting by Tokyo markets team; Editing by Jon