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Forex -- Yen Sips to 5-Week Lows; Sterling Steady near 1-1/2 Month Highs - The yen slid to a five-week low against the dollar on Tuesday, while the British pound was hovering near one-and-a-half month highs amid diminishing chances of a no-deal Brexit and cautious hopes of a trade war breakthrough.

By 03:32 AM ET (07:32 GMT) the dollar ticked up 0.1% to 107.31 yen.

Moves in the foreign exchange market remained subdued ahead of a key European Central Bank meeting on Thursday, where policymakers are widely expected to deliver a package stimulus measures to offset the effects of an ongoing U.S.-Sino trade war and a global economic slowdown.

The U.S. Federal Reserve is also widely expected to cut interest rates next week as policymakers race to shield the global economy from risks, which also include Brexit.

Data overnight showing that Chinese factory-gate prices shrank at their fastest pace in three years underlined arguments for more central bank stimulus.

Market hopes for a trade breakthrough rested on confidence overnight from U.S. Treasury Secretary Steven Mnuchin, who told Fox television that there had been "a lot of progress" on a U.S-China trade deal and that the U.S. side was "prepared to negotiate".

Tapas Strickland, a director of economics at National Australia Bank, said trade remained subdued with few drivers beyond Mnuchin's comments and the prospect of stimulus in Germany. However, the absence of any in immediately bad news for markets has helped sentiment.

Sterling was holding just below a six week peak at 1.2331 after Britain's parliament voted, as expected, to stymie Prime Minister Boris Johnson's bid for an early election, which prompted him to vow that he would secure a Brexit deal at an EU summit next month.

"While I am loath to go anywhere near the pound, I like what I see in the price action," said Chris Weston, head of research at Melbourne forex brokerage Pepperstone Group.

"If GBP/USD kicks up through $1.2354 again, I would be looking for longs, with a stop through $1.2234."

The euro was flat at 1.1043, underneath an overnight high of 1.1067 hit following a Reuters report that Germany may set up public investment agencies to boost fiscal stimulus without breaching national spending rules.

--Reuters contributed to this report

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