(Adds analyst quotes; changes dateline, previous LONDON)
By Kate Duguid
NEW YORK, Oct 21 (Reuters) - The dollar was crawling toward
its worst month since January 2018 on Monday as intermittent
waves of Brexit optimism pushed the pound to a 5-1/2 month high
and kept the euro's bumper October intact.
Although Prime Minister Boris Johnson this weekend was
forced by his opponents to send a letter to Brussels seeking a
delay to Britain's departure from the European Union as UK
lawmakers delayed a vote on a reworked Brexit deal, the currency
market reflected tentative hopes that it would eventually be
passed. Johnson will again try to put his Brexit deal to a vote
in parliament on Monday. Against the dollar, sterling GBP= was last up 0.1% in
North American trade, having earlier broken above $1.30 for the
first time in 5-1/2 months. The euro was 0.18% higher against
the dollar EUR= , having also been lifted by Brexit optimism
this month by 2.23%.
"Brexit has been doing a lot of the hard work in terms of
moving things around," said Daniel Katzive, head of foreign
exchange strategy for North America at BNP Paribas in New York.
"Whereas the impact of Brexit on sterling is obvious,
euro-USD's response to diminished Brexit fears has probably been
larger than what we had expected. This suggests that a lot of
the weakness in the euro over the previous few months was being
driven by Brexit concerns and as those are reducing, we're
seeing the euro get closer to where we think where it should
have been all along based on rate differentials."
The dollar .DXY is down 2.1% this month against a basket
of six rival currencies which, if it stays that way, would be
its worst month since January 2018.
It hovered at $1.115 per euro on Monday but managed to claw
up to 108.52 JPY= against the safe-haven Japanese yen. The yen
has been weak too, having hit a 2-1/2-month low last week.
The dollar has also been falling against a backdrop of
weaker U.S. data including disappointing retail sales which fell
for the first time in seven months in September as households
cut spending on vehicles, building materials, hobbies and online
purchases. "There are definitely some warning signs on the U.S. data
front, which I think is also impacting the dollar," said
Katzive.