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UPDATE 1-Pound on backfoot as Brexit timetable blocked, election risk grows

Elizabeth Howcroft and Ritvik Carvalho

* Graphic: World FX rates in 2019 http://tmsnrt.rs/2egbfVh

* Graphic: Trade-weighted sterling since Brexit vote http://tmsnrt.rs/2hwV9Hv (Updates with news of Johnson-Corbyn meeting)

LONDON, Oct 23 (Reuters) - Sterling slipped further off recent highs around $1.30 on Wednesday after Britain's parliament approved a Brexit withdrawal deal but rejected the tight timetable to legislate on the agreement before a Oct. 31 deadline.

British Prime Minister Boris Johnson told parliament that if it defeated him on the timetable and forced a delay until January he would abandon his attempt to ratify the deal and push for an election before Christmas instead. That led investors to price in elections and Brexit delay.

"Sterling retraced some of its gains again last night after many optimists had to realise that the hope of a happy end next week has now died," Commerzbank analyst Antje Praefcke told clients.

News that British opposition Labour leader Jeremy Corbyn met Johnson to discuss a new timetable for passing Brexit legislation briefly moved the pound into positive territory, although it gave up gains shortly after.

Sterling was 0.04% lower to the dollar at $1.2867 by 1050 GMT after falling 0.62% on Tuesday. It was unchanged against the euro, last trading at 86.34 pence.

Two-week implied volatility on sterling - a contract that captures the Oct. 31 deadline, continued to fall, indicating there is little fear of a no-deal Brexit around that date. It was trading around 11.3%, the lowest since Oct. 10.

However, the renewed uncertainty especially around possible elections, boosted British government bonds, pushing 10-year yields as much as 5 basis points lower to the lowest since Oct. 16.

"If an election is called I do think the pound will go lower, because elections lead to uncertainty and uncertainty leads to a higher premium into UK investments," said Jordan Rochester, currency strategist at Nomura.

"Even though it's unlikely, you have to price in the risk of Jeremy Corbyn elected government or a Brexit Party involvement in the next government."

Rochester sees the pound heading lower to around $1.27 on an election announcement.

RBC analysts said that if the European Union granted the UK an extention, as seems likely, the pound would reverse the most recent losses. But they added:

"If we are heading for an early election, expect further, but limited, downside." (Reporting by Elizabeth Howcroft, Sujata Rao and Ritvik Carvalho, Editing by Angus MacSwan, William Maclean)