Sterling rose on Tuesday before British lawmakers were scheduled to vote on whether to take a proposal off the table to leave the European Union without a deal, while the U.S. dollar was little changed ahead of a Federal Reserve two-year policy meeting.
The euro, yen and other major currencies were locked in narrow trading ranges, with traders reluctant to take big positions due to uncertainty over the U.K. parliamentary vote.
There were also clues from the U.S. central bank that it might pause from its current rate-hike campaign.
Investors expect the Fed to adopt a more cautious stance, pressured by signs of a peak in U.S. corporate earnings and the threat of an economic slowdown both at home and globally.
Fed policy makers convene Tuesday and are expected to release a policy statement on Wednesday at 2 p.m., followed by a press conference from Fed Chairman Jerome Powell.
"You are not going to see any breakout in currencies at this point," said Mark Heppenstall, chief investment officer at Penn Mutual Asset Management at Horsham, Pennsylvania.
Investors were also jittery after U.S. officials announced criminal charges against China's Huawei Technologies for violating U.S. sanctions against Iran. This ratcheted up tensions between Washington and Beijing before trade talks this week.
At 1:15 a.m. ET, an index that tracks the dollar against a basket of currencies was up slightly at 95.81. It touched a two-week low during the session.
The yuan was steady at 6.7304 per dollar, scaling back from Monday when it reached its strongest level since July.
After rejection of Prime Minister Theresa May's Brexit proposal this month, other lawmakers offered amendments. One would postpone the March 29 Brexit deadline if a deal with the European Union is not approved by Feb 26.
Traders are betting parliament will not pull out of the EU without terms on trade and business activities, fearing such a "no-deal Brexit" could severely disrupt the economy. Voting on the amendments will begin at 2 p.m..