(Recasts, new throughout; adds analyst quotes)
By Kate Duguid
NEW YORK, Oct 23 (Reuters) - The British pound and the euro
both stabilized against the U.S. dollar on Wednesday as European
Union leaders delayed a decision on whether to grant Britain a
three-month Brexit extension.
Britain appears closer than ever to resolving its 3-1/2-year
Brexit conundrum, after Prime Minister Boris Johnson clinched a
deal with the EU on the terms of its exit last week and secured
an early signal of support for it from the British parliament on
Tuesday. But UK lawmakers rejected a three-day timetable for
passing the necessary legislation, forcing Johnson to ask
Brussels for an extension of the Oct. 31 deadline to ratify a
deal.
EU member states delayed approval of the extension on
Wednesday, but European Council President Donald Tusk said
earlier on Twitter he was recommending that EU leaders back
Britain's request. Johnson has said if the deadline is deferred to the end of
January he would call an election by Christmas.
Foreign exchange trading was generally quiet following a
sell-off in the pound on Tuesday but both the pound and euro
gained against the dollar late Wednesday. Against the dollar,
the pound was last up 0.37% to $1.292 GBP= . The euro EUR=
was up 0.1% to $1.114. Against the euro, the pound was 0.28%
stronger at 86.17 pence EURGBP= .
The dollar index was down 0.09% at 97.436 .DXY .
"After the slide in sterling we saw yesterday we are
actually seeing a bit of a stabilization this afternoon," said
Shaun Osborne, chief foreign exchange strategist at Scotia
Capital.
He noted, however, that "the upside for both sterling and
the euro is probably fairly limited until we get some clarity on
the (Brexit) situation."
Still, the pound has been able to recover "given that a
no-deal Brexit has seemingly been taken off the table," said Joe
Manimbo, senior market analyst at Western Union Business
Solutions.
Johnson on Tuesday did not follow through on his threat to
pull the deal if parliament defeated him on the timetable, which
was understood by the market as all but eliminating the chances
of no-deal exit.
Safe haven currencies earlier Wednesday were boosted by the
Brexit uncertainty, but by late afternoon in North America,
those gains had been erased. The Japanese yen JPY= was last
0.18% lower at 108.65 per dollar, with the Swiss franc CHF= at
0.990 per dollar.