FX round-up: Pound slips, but JP Morgan less pessimistic on Brexit talks
Sterling was on its back foot at the start of the week, but only slightly so, as traders tried to gauge the probabilities of a withdrawal deal being reached before 31 October.
Following the previous session's jump, as of 1651 BST the pound was down by 0.49% to 1.25870 versus the US dollar and by 0.35% to 1.1419 against the European single currency.
Euro/dollar was also retracing a smidgen of Friday's gains, drifting 0.13% lower to 1.10255.
Nevertheless, there was still more optimism in the air that a so-called 'hard Brexit' could be avoided, although perhaps not by the time of the UK Prime Minister's self-imposed deadline of 31 October.
On Sunday, the European Union's chief Brexit negotiator, Michel Barnier, reportedly told envoys from the bloc's 27 nations that London's proposals lacked sufficient detail and still posed a risk to the customs union.
But negotiations were set to continue and the hope was that by Wednesday it would be known if a deal was finally within reach.
If it were not, then the UK might still need to request a further postponement of the date of its withdrawal, a process that could end up in the courts.
For their part, analysts at JP Morgan told clients that there were now even odds that the UK could avoid crashing out of the EU, whereas previously they had been "pessimistic".
IG's Josh Mahony chipped-in saying: "Despite the feeling that Boris Johnson is shifting in order to obtain a deal, mainland European scepticism signals doubts that a deal could be agreed ahead of the summit.
"Nevertheless, for markets we are seeing a shift away from the sense that Johnson actively wants a no-deal Brexit."
In the background, US dollar/yen was little changed, adding 0.03% to 108.41.