By Victor Reklaitis and Joseph Adinolfi, MarketWatch , Suryatapa Bhattacharya

ICE U.S. Dollar index climbs above 100 level

The British pound weakened on Wednesday as the U.K. formally started the process of leaving the European Union.

The pound was changing hands at $1.2411, up slightly from $1.2456 late Tuesday in New York.

The British currency wavered in early trade before turning decidedly lower. It was off 0.3% to $1.2408,

The pound is now down roughly 0.5% on the week, and it is up by about 0.5% against the dollar in 2017 to date. It is down about 17.5% versus the buck since Britons voted on June 23 to leave the EU.

Meanwhile, the ICE U.S. Dollar Index was up 0.3% on Wednesday to 100.01, breaking above 100 for the first time in a week. The index advanced 0.6% on Tuesday (http://www.marketwatch.com/story/dollar-rebounds-in-step-with-stocks-attempt-to-halt-skid-2017-03-28), largely thanks to a set of upbeat economic data. U.S. economic data.

The U.K. government letter received by Donald Tusk (Sterling%20had%20been%20under%20pressure%20late%20Tuesday%20in%20New%20York,%20falling%20as%20much%20as%200.9%%20to%20$1.2450%20versus%20the%20dollar.%20The%20pound%20weakened%20as%20the%20Scottish%20parliament%20voted%20to%20hold%20a%20second%20independence%20referendum,%20granting%20first%20minister%20Nicola%20Sturgeon%20the%20authority%20to%20negotiate%20with%20Westminster%20on%20holding%20another%20vote.), president of the European Council, officially kicked off two years of negotiations that would lead to Brexit's exit. The letter, which invokes Article 50 of the Lisbon Treaty, formally states the U.K.'s intention to withdraw from the EU. It was handed over at lunchtime Wednesday in Brussels after being signed by British Prime Minister Theresa May the day before.

In the letter, May exhorts her European peers to work toward a mutually beneficial agreement that would preserve cooperation on issues like crime and terrorism while avoiding a return to a hard border.

Investors are now awaiting Tusk's response over the next two days, which has the potential to rattle markets, said Naeem Aslam, chief market analyst at Think Forex.

"The next 48 hours are extremely important [for the pound]," Aslam said in a note.

Read:How to trade the pound as Theresa May pulls Brexit trigger (http://www.marketwatch.com/story/avoid-being-short-with-the-crowd-how-to-trade-the-pound-as-may-pulls-brexit-trigger-2017-03-28)

Read:New GBP1 coin has a secret feature--and everyone is baffled by it (http://www.marketwatch.com/story/new-1-coin-has-a-secret-feature-and-everyone-is-baffled-by-it-2017-03-28)

Sterling had been under pressure late Tuesday in New York, falling as much as 0.9% to $1.2450 versus the dollar. Complicating matters, the Scottish parliament voted to hold a second independence referendum, granting first minister Nicola Sturgeon the authority to negotiate with Westminster on holding another vote.

The recent pressure on the pound also has stemmed from the dollar's rebound as investors refocus on the strength of the U.S. economy.

"We believe that the dollar recovery will be more important for the pound in the coming days," said Kathleen Brooks, research director at City Index, in a note.

(END) Dow Jones Newswires

March 29, 2017 09:54 ET (13:54 GMT)