For many markets buoyed by the reassuring hand of central banks, buying dips has proved a profitable strategy. For sterling, selling strength looks a better strategy—even if the U.K. economy continues to perform better than many feared in the short term.

Sterling fell sharply against both the dollar and the euro Monday after U.K. Prime Minister Theresa May said Sunday the formal process for leaving the European Union would start no later than the end of March. The pound fell below $1.29, dropping more than a cent against the...