UPDATE 1-Sterling dips to 3-week lows as Johnson's Brexit plans eyed

The British pound dipped to three-week lows against a broadly robust dollar on Tuesday, with Prime Minister Boris Johnson expected to soon present his proposals for an amended Brexit agreement.

More than three years since the 2016 referendum, the United Kingdom is heading towards an Oct. 31 exit date without a clear understanding of whether it will leave with a deal, without a deal or even leave by that deadline. The government's proposals are expected to include new ideas that remove the contested insurance policy for the Irish border that Britain previously signed up to.

But even before the plan was formally made, Ireland dismissed reported ideas including physical checks on goods at a distance from the border itself. "The market has seen these kinds of headlines before and then we get a push back, so there is some scepticism about what we will see," said Jane Foley, senior currency strategist at Rabobank.

"That leaves sterling in choppy range and there is plenty of news flow this week." At 1020 GMT, the British pound was a touch lower on the day at $1.2294, having briefly dipped to a new three-week low at $1.2260 as the U.S. currency made broad-based gains on renewed evidence of strength in the U.S. economy.

Chartists said they are watching the $1.2279 level, the 50-day moving average -- a technical indicator that refers to the currency's average closing price over the past 50 days. A conclusive breach below that level could open the door to further losses, they said.

Against the euro, sterling was also marginally softer on the day at 88.65 pence. The latest UK economic data had little immediate impact on a currency, largely driven by Brexit headlines.

The IHS Markit/CIPS UK Manufacturing Purchasing Managers' Index showed the factory sector overall shrank for a fifth month in a row, its longest decline since mid-2009. Some economists believe the case for a Bank of England (BoE) rate cut is building although the impact of this on the pound is also being offset by some hopes for a Brexit deal.

The BoE may need to cut rates in the likely scenario that high levels of uncertainty over Brexit persist, policymaker Michael Saunders said on Friday. "There's downward pressure coming from a BoE rate cut but on the other hand, risks of a Brexit deal have moved to the upside. So at present, the two effects net out each other," said Thomas Costerg, senior economist at Pictet Wealth Management.

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