* Lawmakers vote to seek Brexit delay
* Traders now preparing for third vote on deal next week
* Sterling swings wildly in unpredictable week
* Graphic: World FX rates in 2019
* Graphic: Trade-weighted sterling since Brexit vote (Writes through after parliamentary votes, adds quotes)By Tommy Wilkes and Sujata RaoLONDON, March 14 (Reuters) - Sterling retreated on Thursdayas investors prepared for Prime Minister Theresa May to tryagain to win approval for her Brexit deal, after lawmakers votedoverwhelmingly to seek a delay to the United Kingdom's exit fromthe European Union.May will now renew efforts to get her twice-rejected divorcedeal approved next week by Britain's parliament. She is pilingpressure on rebel lawmakers to back her by threatening a longerdelay if they vote against her. After a highly volatile week for the pound during which ithit a nine-month high when lawmakers rejected leaving the EUwithout a deal, trading was relatively calm on Thursday. May'spush for another vote on the deal sets the stage for anothershowdown between her and rebel eurosceptics and means moreuncertainty for investors.""Next week becomes crucial as the prospect of a longextension can get more lawmakers to support May's deal. If herdeal passes with a short extension, then cable could rise to$1.36-37 with an optimistic bias," said Fritz Louw, a currencystrategist at Japanese bank MUFG.In the latest of a series of votes, lawmakers on Thursdayapproved by 412 votes to 202 a statement setting out the optionto request a short delay if a Brexit deal can be agreed by March20 -- or a longer delay if no deal can be agreed in time.All 27 EU members must approve any extension.Sterling was down 0.8 percent at $1.3234 by 1850GMT, slightly lower than before the vote to seek a Brexitdeparture delay. It was down 0.6 percent against the euro at85.35 pence .The pound on Wednesday enjoyed its biggest one-day gain
against the dollar since last April after UK lawmakersresoundingly voted to reject a no-deal Brexit. Investors hope eurosceptic parliamentarians will finallyback the unpopular deal Prime Minister Theresa May negotiatedwith the EU. If not, they may have to accept that Brexit couldbe watered down or even thwarted by a lengthy delay. Some of that optimism has already faded, however, with nosign that lawmakers can reach any consensus on amending May'sdeal so it is acceptable to all sides and the EU.
Tim Graf, head of macro strategy at State Street GlobalAdvisors, said the chances of a no-deal Brexit were now lessthan 5 percent.But he added: "There is always the chance the EU won't grantan extension if they are just going to be trying to push thisdeal through ... that's where the caution comes in."A series of votes, including on introducing a second Brexitreferendum, were rejected by parliament earlier on Thursday andthe pound was little moved.
For full Brexit coverage: WILD RIDESterling has swung wildly this week, trading betweenextremes of $1.2945 and $1.3380 .It reached a peak of 84.72 pence to the euro, approachingrecent 22-month highs .Those gains have been hard to cling onto as traderscontemplate the array of possibilities that have opened up.Options markets show implied sterling volatility -- a gaugeof expected swings in a currency -- still elevated, withtwo-week vols jumping off one-week lows touched on Wednesday.Sterling vol is higher than G10 as well as many emergingcurrency peers.Stephen Gallo, head of European FX strategy at BMO, saidsterling's outlook was not entirely positive.
"The best strategy for trading the pound now is to simplyleave the currency alone, and to make sure one is hedged againstall catalysts for big swings in either direction," he toldclients.<^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^Sterling slips off 9-mth high; implied vol stays high ^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^^> (Additional reporting by Saikat Chatterjee, Tom Finn andRichard PaceEditing by Alison Williams and Catherine Evans)
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