(Bloomberg) -- The pound fell to its lowest level in a week against the dollar as the U.K. gets ready to start the process by which it will leave the European Union and on prospects of a second Scottish independence referendum.
Sterling weakened against all except one of its 16 major peers as British Prime Minister Theresa May proceeds to invoke Article 50 of the Lisbon Treaty on Wednesday. This will officially start time on two years of Brexit negotiations. The pound fell after Scottish lawmakers voted Tuesday to back plans to pursue a second referendum on splitting from the U.K. Some funds left it late in adjusting positions and then did so in poor liquidity, said a trader who asked not be identified as he isn’t authorized to speak publicly.
The pound “has dropped below 1.24 as Article 50 fears and the prospect of a second Scottish Referendum start to bite and the dollar roars back to life,” Kathleen Brooks, EMEA Research Director at City Index, wrote in a client note. “This could be a case of sell the rumor, buy the fact, and we stick to our view that sterling can brush off Article 50-inspired weakness and that sterling is essentially range bound as we formally kick off the process to leave the EU.”
The pound fell 0.3 percent to $1.2409 as of 8:12 a.m. in London, after touching $1.2377, the lowest since March 21. Sterling weakened 0.1 percent to 86.96 pence per euro.