Sterling slips as Brexit talks get underway


Reuters

UPDATE 1-Sterling slips as Brexit talks get underway


* Graphic: sterling and gilt yields http://bit.ly/2dgAXn1
    * Graphic: World FX rates in 2017 http://tmsnrt.rs/2egbfVh
    * Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv

 (Recasts after Brexit talks get underway, new BoE member
appointed, adds new quote, updates prices)
    By Jemima KellyLONDON, June 19 (Reuters) - Sterling edged down against the
dollar on Monday, with demand for the currency weakened by
uncertainty over domestic politics and over Britain's economic
future, as formal Brexit negotiations got under way.
    Britain and the European Union's chief negotiators began
talks by stressing the need to quickly tackle uncertainties in
the process and underlining their constructive attitude to reach
a deal that is good for all [nL8N1JG1X6].
    The EU's Michel Barnier said he hoped the talks - starting
almost a year to the day after a British referendum vote to
leave the EU - would establish a timetable for the negotiations.
    Britain's Brexit minister, David Davis, said the UK wanted a
"new, deep and special partnership" with the EU after it leaves,
and that he would conduct the talks in a constructive tone.
    Currency traders, though, seemed unimpressed. Sterling
ticked gently lower throughout the day against the dollar,
trading down around 0.2 percent at $1.2753 <GBP=D3> by 1455 GMT,
having opened the day slightly higher.
    That left it almost 2.5 percent lower than an eight-month
high hit in May on the view that Prime Minister Theresa May's
Conservative party would increase its majority in elections on
June 8, giving Britain a strong position to negotiate with the
EU from.
    "With political instability in Westminster placing the UK in
a vulnerable position and Conservatives in a weaker position
following the election, the outcome of the Brexit talks may
heavily depend on what Europe wants," said FXTM analyst Lukman
Otunuga.
    "Although the prospect of a soft Brexit has the ability to
support sterling, I feel the currency remains vulnerable to
further downside amid the confusion and ongoing uncertainty that
Brexit presents."
    Data released by the Commodity Futures Trading Commission on
Friday showed speculators took bets against the pound to the
highest since early May in the week up to last Tuesday, after no
party managed to win a parliamentary majority in the election.
[IMM/FX]
    Against the euro, the pound was flat at 87.60 pence
<EURGBP=D3>.
    The Bank of England, which provided sterling with a small
boost last week when three members of its policy committee voted
to raise interest rates, on Monday named Silvana Tenreyro, a
trade-focused London School of Economics academic, as the newest
member of its rate-setting committee [nL8N1JG2S1].
    She will replace Kristin Hawkes - one of those who voted in
favour of a hike last week.
    "In general of the view relative to the hawkish person she
is replacing (Forbes) and the view that new members do not
usually jump straight into a bias, we would assume a slight
swing to a more dovish vote," wrote Nomura market analysts in a
note to clients.


 (Editing by Larry King)
 ((jemima.kelly@thomsonreuters.com; +44)(0)(20 7542 7508;
Reuters Messaging: jemima.kelly.thomsonreuters@reuters.net))

Keywords: BRITAIN STERLING/ (UPDATE 1)



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