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Pound finds forward gear ahead of Lords Brexit debate
February 20, 2017 / 10:21 AM / 9 months ago

Pound finds forward gear ahead of Lords Brexit debate

* 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 Marc Jones

LONDON, Feb 20 (Reuters) - The pound rose against most major currencies on Monday, snapping a three-day fall versus the euro, at the start of another week likely to be dominated by questions about how Britain will leave the EU and the impact of Brexit on the economy.

The upper house of parliament, known as the House of Lords, was set to begin debating the bill which will pave the way for the formal start of talks on how Britain will leave the European Union, the triggering of Article 50.

Opposition party and crossbench Lords’ members are seeking amendments to force the government to give more regular updates on the divorce talks and secure guarantees for the rights of EU citizens living in Britain.

The pound was enjoying its best day since the start of month, up 0.5 percent against the dollar at $1.2475 and at 85.16 pence per euro. It was also up by similar or more against the yen and Swiss franc.

“The Article 50 debate in the Lords could be more interesting than expected. It does seem that there is a bit more of a push for amendments,” said Societe Generale FX strategist Alvin Tan. The regularity of such updates would be the most interesting element for currency markets, he added.

Former prime minister Tony Blair last week urged Britons to “rise up” and block or soften Brexit, but it may now be out of their hands -- many Europeans just want them to get on and get out.

While officially the door remains open for Britain to stay, many on the continent would not welcome a U-turn now. “This bus has left,” one senior EU diplomat told Reuters.

Sterling volatility contracts, which give traders the options to bet on large swings in the pound, have fallen in recent weeks, suggesting markets expect no immediate drama when Britain does formally trigger Article 50.

The pound has been drifting lower versus the dollar since mid-January when British prime minister Theresa May sketched out her first real Brexit plan.

But it has climbed 4 percent against the euro as the shared currency has faced its own strains from political uncertainty in France and the Netherlands and Greece and Italy.

UK economic data is showing signs of stumbling. Asking prices for UK homes saw the smallest February rise since 2009, data from online property site Rightmove showed on Monday, dovetailing with weak consumer confidence numbers last week. .

Business industry data is due at 1100 GMT that should show whether the weaker pound is still benefiting exporters.

On Tuesday, the head of the Bank of England will be grilled by a parliamentary select committee, while on Wednesday the UK’s official statistics office will publish a revised reading of fourth quarter GDP figures. (Reporting by Marc Jones; Editing by Catherine Evans)

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