* Sterling falls 0.6% in Asian trade
* Pound slips after UK parliament forces Brexit delay
* Dollar higher but on course for worst month since Jan 2018
* Yen stays weak ahead of BOJ meeting
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh
By Marc Jones
LONDON, Oct 21 (Reuters) - Sterling fell as much as 0.5%
after Britain's parliament delayed a crucial vote on the
government's new Brexit plan, while the dollar, which is on
course for its worst month since January 2018, clawed higher.
It was little surprise to see sterling backing off 5-month
highs on Monday after "super-Saturday" failed to live up to its
billing, ensuring more Brexit drama to come. Asian trading had delivered an instant hit and by the time
European trading settled, the pound GBP=D4 was down 0.4% to
$1.2920. It had closed last week at just below $1.30 having
soared 6.5% since British Prime Minister Boris Johnson struck a
new EU divorce deal on Oct. 10.
"The number one issue now is whether they are going to allow
the vote (on the deal) to happen later," said Saxo Bank's head
of FX strategy John Hardy, who added the FX market now seemed to
be betting on the deal being approved.
"You could see further (upward) reaction if that is the case
but also quite some downside if there is a delay and we get back
into what happens next."
Despite Saturday's delay of the deal vote, which meant
Johnson had to begrudgingly ask the EU for another extension of
the Brexit deadline, UK Foreign Secretary Dominic Raab told the
BBC that he was confident enough lawmakers would pass the deal.
The political manoeuvring puts the timing of the whole
process in question yet again, even though markets seem assured
that it significantly reduces a 'no deal' Brexit, considered by
many to be the worst-case scenario for the UK economy.
"Although many eyes are still on Brexit, there is not so
much nervousness in the market as the risk of a no-deal Brexit
has actually reduced over the weekend," said Shinichiro Kadota,
senior forex and rates strategist at Barclays in Tokyo.
Goldman Sachs said it sees the chance of a 'no deal' Brexit
reduced to just 5%, from 10% previously. Elsewhere, currency moves were limited though the last few
weeks has seen some sizeable shifts taking place.
The dollar is down 2.5% this month against a basket of top
currencies which, if it stays that way, would be its worst month
since January last year.
It edged up against the euro to $1.1157 per euro but was
little changed at 108.48 JPY= to the safe-haven yen. The yen
has been weak too, last week hitting a 2-1/2-month low.
CENTRAL FOCUS
The Bank of Japan meets later this month and could nudge its
interest rates even deeper into negative territory, while
Thursday will be Mario Draghi's last meeting in charge at the
European Central Bank.
China's yuan firmed on Monday after the central bank fixed
the daily midpoint at its strongest in five weeks, and a comment
from the central bank chief that the exchange rate was at the
"appropriate level" reinforced market sentiment.
Prior to market opening, the People's Bank of China (PBOC)
set the midpoint rate CNY=PBOC at 7.0680 per dollar. It was 10
pips firmer than the previous fix of 7.0690, and the strongest
since Sept.16.
In a statement posted on the International Monetary Fund
website on Saturday, PBOC Governor Yi Gang said the yuan is at
"an appropriate level" based on economic and market
fundamentals. "Depreciation since the beginning of August has been driven
and determined by market forces and reflects shifts in market
dynamics and volatilities in global foreign exchange markets
amid recent global economic and financial developments and
escalating trade tensions," Yi said.
Sterling falls https://tmsnrt.rs/35RTMtl
Sterling shorts trimmed https://tmsnrt.rs/2W0D9ae
Dollar positioning and dollar index https://tmsnrt.rs/31xSQqH
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