* Sterling falls 0.7% in early Asian trade
* British parliament votes to force Brexit delay
* PM Johnson sends EU unsigned letter seeking Brexit
extension
* UK says Brexit will happen on Oct. 31
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Tomo Uetake
SYDNEY, Oct 21 (Reuters) - Sterling fell over half a percent
against the dollar on Monday, slipping from five-month highs
after the British parliament delayed a crucial vote on a Brexit
withdrawal agreement.
The move derailed Prime Minister Boris Johnson's plan for a
decision on his withdrawal deal, but the pound held the bulk of
its recent rally on confidence that a disorderly exit from the
European Union would be avoided.
In early Asian trade, the pound GBP=D4 fell 0.72% to
$1.2896, having hit a five-month peak of $1.2990 on Friday and
closing the week just below the $1.30 mark, a 6.5% surge since
Johnson struck an EU divorce deal on Oct. 10.
Lawmakers on Saturday voted to withhold a decision on
Johnson's deal, a move that forced him to seek from the EU a
third postponement of Britain's departure from the bloc.
Britain's exit had been envisaged for Oct. 31. But Johnson added another note saying he was opposed to an
extension and British government minister Michael Gove said on
Sunday Brexit will happen by Oct. 31 as the government seeks to
get the Brexit bill through the parliament.
Analysts said the market focus will turns to this week's
vote on Boris Johnson's deal. Foreign Secretary Dominic Raab
told the BBC overnight that he was confident enough lawmakers
would back the deal this week.
"The weekend's events, if anything, have further reduced the
risk of disorderly exit," said Adam Cole, chief currency
strategist at RBC Capital Markets in London.
"If there is a knee-jerk negative reaction in the pound as
we emerge from the weekend with a greater overhang of
uncertainty than hoped and some of the long positions are
unwound, it should be faded soon."
The European Union will play for time rather than rush to
decide on London's reluctant request to delay Brexit again,
diplomats said on Sunday. While weary of the Brexit process, EU leaders are keen to
avoid a disorderly exit and are unlikely to reject the request.
They hope the deal can eventually be approved in London.
Goldman Sachs GS.N said on Sunday that it lowered the
probability of a no-deal Brexit to 5% from 10% and maintained
its baseline view that the UK will leave the EU on Oct. 31.
"The uncertainty is likely to weigh on sterling when trading
resumes in Asia Pacific on Oct. 21. Volatility will remain
elevated until a clearer picture emerges," said Marc Chandler,
chief market strategist at Bannockburn Global Forex in New York.
The euro eased 0.15% to $1.1155 EUR= versus the greenback,
off Friday's two-month high of $1.1172.
The dollar was little changed at 108.41 JPY= to the
safe-haven yen, still not far from its 2-1/2-month high of
108.94 yen marked on Thursday.
Sterling falls https://tmsnrt.rs/35RTMtl
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