- Pound trims losses after Brexit setback
- French woes weigh on euro
- Resignation of central bank head hits Indian rupee
- Graphic: World FX rates in 2018 http://tmsnrt.rs/2egbfVh
The pound edged up from 20-month lows on Tuesday as investors tried to decide whether British Prime Minister Theresa May's postponement of a vote on her Brexit deal would lead Britain into a chaotic exit from the European Union.
May called off a parliamentary vote on her Brexit agreement to seek more concessions. The move thrust Britain's exit from the European Union into turmoil and pushed the pound down.
Possible outcomes now include a disorderly no-deal Brexit, another referendum on EU membership, or a last-minute renegotiation of May's deal with Brussels.
After falling 1.6 percent against the dollar on Monday to as low as $1.2507 GBP=D3 , sterling recovered somewhat, trading up 0.4 percent at $1.2621.
"The market has priced in a slightly bigger chance for a no-deal Brexit," said Commerzbank analyst Thu Lan Nguyen. "But we will move sideways again until we have a decision of some kind."
EU leaders will discuss Brexit at a summit this week, but "will not renegotiate the deal," European Council President Donald Tusk said on Monday.
Weakness in sterling helped nudge the euro up 0.2 percent to $1.1377 EUR=EBS .
Concerns over violent protests in France against President Emmanuel Macron's economic reform have limited the euro's gains recently.
Investors are focused on the European Central Bank's economic assessment of the euro zone, due on Thursday.
FED PAUSE? The pound's slide has also helped the dollar, which recovered from a 2 1/2-week low against a basket of currencies. The dollar had fallen amid speculation the Federal Reserve would pause its rate increases sooner than previously thought.
The dollar index, a measure of its strength versus a group of six major peers, was a touch lower at 97.092 .DXY after rallying 0.75 percent on Monday. At one stage in overnight trade, it had fallen to 96.364, its lowest since Nov. 22.
Falling U.S. bond yields will eventually force the dollar into a downtrend, but probably not at this moment," said Junichi Ishikawa, senior FX strategist at IG Securities in Tokyo.
The 10-year Treasury note's yield US10YT=RR has dropped to a three-month low this week, with dovish comments from Fed officials and soft U.S. economic data reinforcing views on a pause in the tightening cycle.
In emerging markets, the Indian rupee was jolted after Reserve Bank of India Governor, Urjit Patel, resigned abruptly on Monday, after a months-long dispute with the government over policy that has raised concern about the bank's independence.
Indian rupee forwards INRNDFOR= fell more than 1 percent on Monday, their biggest daily slump in more than five years.
The Australian dollar rose 0.1 percent to $0.7197 AUD=D4 after slipping on Monday to a one-month low of $0.7170.
