FOREX-Sterling falls against dollar on Brexit uncertainty

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

(Recasts, new throughout; adds analyst quotes; changes
dateline, previous LONDON)
By Kate Duguid
NEW YORK, Oct 25 (Reuters) - The dollar strengthened against
the pound on Friday after Reuters reported a source close to
French President Emmanuel Macron said an extension to the
negotiations for Britain's exit from the European Union was not
justified at this stage.
"France wants a justified and proportionate extension.
However, we have nothing of the sort so far. We must show the
British that it is up to them to clarify the situation and that
an extension is not a given," the source told Reuters.
Against the pound, the dollar was up 0.29% to $1.281 GBP= .
Since hitting a 5-1/2-month high on Monday, sterling has fallen
nearly 1.5% after Prime Minister Boris Johnson's timetable to
pass legislation that would withdraw Britain from the EU was
rejected by the British parliament, the reason for the requested
extension.
On Thursday, Johnson called for a general election on Dec.
12 in an effort to break the political deadlock over Brexit.
Despite the uncertainty, the pound's fall has been limited
since the chance of a no-deal exit has been all but eliminated.
The pound remains up 4.34% this month. Against the euro, it was
down 0.17% to 86.55 pence per euro EURGBP= .
"There's still a focus on the UK and sterling, but that's
going to be a feature for a long time," said Shahab Jalinoos,
global head of foreign exchange strategy at Credit Suisse.
Apart from the ongoing Brexit saga, Jalinoos said the
currency market on Friday was relatively quiet.
"At the moment the market is taking a breather on most
fronts. The next event that's a major focus is the APEC summit
in the middle of November when the market will want to see what
transpires from Phase 1 negotiations between the U.S. and China.
That's far enough in the future that it's eliminating some
reasons to aggressively trade."
The low volatility environment, he said, is encouraging
flows into certain higher-yielding assets like emerging markets
and out of the funding currencies such as the Swiss franc and
the euro. The single currency EUR= was last down 0.14% against
the dollar to $1.109.
Some focus will shift next week to the U.S. Federal
Reserve's two-day policy meeting. The central bank is expected
to announce on Oct. 30 the third interest rate cut of the year.
Money markets have largely priced in a quarter-percentage-point
reduction, according to Refinitiv data.