Sterling retreated from six-week highs against the dollar today as UK prime minister Boris Johnson stuck to his pledge to take Britain out of the European Union by October 31, vowing not to seek an extension to the deadline. 

The PM is required by a law passed this month to ask the EU for a three-month delay to Brexit if a deal is not approved by October 19.

But British media reports say his team are looking at ways to circumvent it. Johnson said yesterday that Brexit would happen on October 31 - with or without a deal. 

Britain's top court has started to hear the government's argument that Johnson's decision to suspend parliament until shortly before the Brexit date was not illegal as Scottish judges concluded last week. 

His opponents say the suspension was aimed at impeding parliament from preventing a no-deal Brexit, an accusation Johnson denies. 

"The decisive question for the pound exchange rates remains whether or not a no-deal Brexit at the end of October is de facto off the agenda," Commerzbank analysts told clients.

The bank added that the latest developments showed sterling's recent rally was not justified. 

The currency has firmed more than 3% in the past month, its gains accelerating after parliament passed the law ruling out no-deal Brexit. 

It jumped 1.3% last Friday, grasping at a headline - later denied - that Johnson's Northern Ireland allies may soften their Brexit stance. 

Sterling was 0.2% lower at $1.2399 in mid-morning trade after also losing ground yesterday. 

The currency is also being buffeted by the volatile dollar, which rose last night as oil prices eased and trade tensions with Japan appeared to cool. 

The greenback inched to a five-day high against a basket of currencies ahead of the US Federal Reserve's policy meeting this week. 

Against the euro, sterling fell 0.3% to 88.9 pence having touched a three-month high yesterday.

With less than seven weeks until the Brexit deadline, Johnson is hoping a Brexit deal can be clinched at an EU summit on October 17-18.

He said a Brexit deal was emerging, but the EU said he had offered nothing to break the impasse. 

Commerzbank noted that on options markets, insuring against a steep pound fall still carries a sizeable premium. That shows "options traders do not exclude a major sterling bang" they added.