FX round-up: Sterling slips after government postpones third meaningful vote

Sterling slipped at the start of the week as the Prime Minister told MPs she did not yet have sufficient support to get her proposed Brexit deal through the House of Commons; hence her decision to postpone another vote on it.

Speaking in the House of Commons, Theresa May said she was aiming to carry out a third vote on her proposal for the UK's withdrawal from the European Union during the week and agreed to allow MPs indicative votes on her plans in order to explore alternatives.

But she did not commit to delivering the outcome of any such votes, arguing that "the votes could lead to an outcome that is un-negotiable with the European Union."

Should the House not approve her deal and assuming it remained against allowing a no-deal result, the PM said she would be forced to seek a longer extension of Article 50 and that "we will not be able to guarantee Brexit".

Earlier, reports had suggested that a third so-called meaningful vote might be held on Tuesday, followed by indicative votes on the following day if that vote went against her.

Against that backdrop, as of 1646 GMT the pound was trading 0.24% lower versus the US dollar at 1.31786 and down by 0.34% against the euro.

Moves in the other major currency pairs were similarly restrained, with euro/dollar adding just 0.06% to 1.1311 and US dollar/yen up by 0.09% to 110.018.

In the background meanwhile, the US dollar spot index was drifting lower by 0.10% to 96.5530, having earlier plumbed a session low at 96.4410.

Weighing on the Greenback, speaking overnight in Hong Kong, Chicago Fed boss Charles Evans said the risks to the economic outlook were tilted to the downside.

"If activity softens more than expected or if inflation and inflation expectations run too low, then policy may have to be left on hold - or perhaps even loosened - to provide the appropriate accommodation to obtain our objectives," he said.

He was speaking following the first - albeit only marginal - inversion in the 3-month-10-year US Treasury yield curve since 2007 on Friday, which had triggered a wave of market chatter regarding the now heightened likelihood of an economic recession in the States.

To a degree, his remarks were echoed by former Fed chair Janet Yellen.

Speaking at the same venue, Yellen said that curve inversions happen very easily but that alone they do not signal that a US recession is imminent.

Nevertheless, it can signal that the Federal Reserve may at some point need to cut interest rates, she added.

Rate-setters at the European Central bank were making similarly dovish-sounding noises, with executive board member, Benoit Coeure, telling a conference in Lisbon: "I don't think we have been to the limit of what we can do. I'm confident we can do it once again."