The dollar rose on Tuesday against the pound and euro as uncertainty spread ahead of the British parliament's vote on the Withdrawal Agreement Bill which will shine light on when and how Britain will exit the EU.
The United Kingdom is expected to leave the European Union on Oct. 31, but the deal Prime Minister Boris Johnson and his European counterparts agreed last week has not been yet voted on in Britain's parliament, which forced Johnson to request an extension to the leaving date from Brussels.
The bill is expected to be presented for a vote around 1800 GMT.
Sterling was down 0.35% to $1.291 in mid-morning trade after Johnson told parliament that if it delayed his Brexit legislation he would abandon his attempt to ratify the deal to leave the European Union and push for an election instead.
The euro was down 0.19% versus the dollar, though remains up 2.09% this month, driven mostly by recent Brexit developments, as well as by trade disputes between the United States and China.
"I think the clear theme for euro and sterling is consolidation after last week's Brexit euphoria," said Mark McCormick, global head of foreign exchange strategy, TD Securities.
Elsewhere, he said, Tuesday morning trade was driven by, among other factors, "a reach for yield, which is probably a function of a ceasefire in the trade wars and the scope for Fed easing next week."
Hopes the United States and China were making progress to resolve their trade dispute supported the dollar in the Asian trading session. China's Vice Foreign Minister Le Yucheng said progress was being made in discussions with the United States and that while both sides respected each other, no problem was beyond resolution.
The dollar index was last up 0.17% to 97.489.
Elsewhere, the Canadian dollar weakened against its U.S. counterpart after Prime Minister Justin Trudeau hung onto power after a tight election on Monday that saw his government reduced to a minority. He now looks set to govern with support from the left-leaning New Democrats who would make the construction of new oil pipelines more difficult.
The left-leaning coalition isn't "beneficial for the Canadian dollar, versus a Conservative majority which would have seen a rally, largely because there is going to be focus on the pipelines, which reinforce some of the competitiveness issues on the Canadian oil front," said McCormick.