The pound was down 0.73 percent at $1.324 in afternoon trading, after members of parliament voted 412 to 202 to delay Brexit beyond the current March 29 deadline.
A day earlier, the British currency soared nearly 2 percent and reached nine-month highs after lawmakers voted against a potentially disorderly “no-deal” departure from the EU.
Analysts cautioned against putting large positions on sterling due to lingering uncertainty about Brexit.
“With the uncertainty around (Brexit), it’s not a time... to take sizeable positions. The risk/reward still favors waiting for some clarity,” said Charles Tomes, senior investment analyst, Manulife Asset Management.
The dollar index, a gauge of its strength against six other major currencies, was up 0.25 percent at 96.79. It shed 0.4 percent overnight, at one point brushing a nine-day trough of 96.385.
“In the foreign exchange market overall there’s not a lot of conviction” at the moment, said Tomes. “Volatility is low and people don’t want to put on sizeable positions either way.”
The Australian dollar fell after reports that China and the United States had delayed a meeting to end their trade war. The meeting between President Donald Trump and President Xi Jinping will not occur this month and is more likely to happen in April at the earliest, Bloomberg reported.
The Australian dollar reacted the most to the report, last at $0.7064, down 0.41 percent on the day.
Investors are worried that any escalation in the trade conflict will pummel export-oriented economies like Australia, whose biggest trading partner is China. The yuan was relatively stable in the offshore market, up 0.22 percent at 6.7209.
The number of Americans filing for unemployment benefits increased more than expected last week, suggesting the labor market was slowing, but probably not to the extent implied by a near-stall in job growth in February.
Other U.S. data showed import prices in February rose by the most in nine months. Still, the inflation trend remained weak as import prices dropped on a year-on-year basis for a third straight month. The data remained supportive of the Federal Reserve’s pledge to be “patient” before raising interest rates.