By Suryatapa Bhattacharya 
 

TOKYO--The British pound declined against the U.S. dollar and the yen in early Asia trading on Wednesday ahead of formal negotiations by the U.K. to exit the European Union.

The pound was recently at $1.2385, its lowest intraday level versus the greenback since January 21.

The decline started late Tuesday in New York, when the pound fell as much as 0.9% to 1.2450 versus the dollar.

The selloff continued early Wednesday in Asia. The pound fell to Y137.60, its lowest level since January 17.

The currency's volatility is hinged to the U.K.'s preparation to exit the EU. Wednesday marks the start of a formal process under which Britain will trigger Article 50, a measure to formally notify its plans to leave the bloc, starting the clock on a two-year period of negotiations over the terms of the divorce.

"The actual event is not necessarily the risk but it's the surrounding commentary," said Bart Wakabayashi, Tokyo branch manager for State Street Bank and Trust.

There is a consensus among market participants that the two sides--England and the EU--will get the concessions they are seeking but the concern is the process, Mr. Wakabayashi said.

"There is no shock factor here but they are starting from such different points that there is a risk of hiccups," he added. "They are going to be discussing completely different points of view and that's where the [market] volatility is coming from," Mr. Wakabayashi said.

Still, the pound's decline was supported some by the U.S. dollar that rebounded Tuesday as investors refocused on the strength of the U.S. economy.

The Wall Street Journal Dollar Index, a measure of the dollar against a basket of 16 currencies, was up 0.1% at 90.05.

The Conference Board's consumer confidence index surged in March to its highest level in 16 years. S&P CoreLogic Case-Shiller Indices showed home prices in January rose at their fastest rate since mid-2014.

Adding some flows back into the dollar and calming markets a bit was U.S. data combined with market expectations that the European Central Bank may continue to discuss easing its monetary policy, said Koji Fukaya, chief executive of FPG Securities in Tokyo.

"Market participants are relieved on the economic front, but some geopolitical risk in Europe remain," Mr. Fukaya said.

 
Interbank Foreign Exchange Rates At 00:50 EST / 0450 GMT 
 
                         Latest     Previous   %Chg   Daily     Daily   %Chg 
                                     2150 GMT          High     Low     12/31 
USD/JPY Japan         111.07-08     111.14-15  -0.06   111.24   111.05  -5.07 
EUR/USD Euro          1.0819-22     1.0812-15  +0.06   1.0823   1.0809  +2.86 
GBP/USD U.K.          1.2413-15     1.2449-51  -0.29   1.2463   1.2377  +0.56 
USD/CHF Switzerland   0.9916-20     0.9923-27  -0.07   0.9929   0.9915  -2.66 
USD/CAD Canada        1.3382-87     1.3382-87   0.00   1.3395   1.3373  -0.42 
AUD/USD Australia     0.7646-50     0.7633-37  +0.17   0.7657   0.7631  +6.19 
NZD/USD New Zealand   0.7002-08     0.7013-19  -0.16   0.7019   0.6998  +1.16 
 
Euro Rates 
 
EUR/JPY Japan           120.16-20      120.16-20   0.00   120.36   120.07  -2.37 
 
Source: Tullett Prebon 
 

Write to Suryatapa Bhattacharya at suryatapa.bhattacharya@wsj.com

(END) Dow Jones Newswires

March 28, 2017 21:46 ET (01:46 GMT)