Mrs May was in Brussels yesterday for crunch talks in the hope of a Brexit breakthrough, but was told she had nothing new to bring to the negotiating table.
The EU27 said in a statement: “For now, EU27 is not planning to organise an extraordinary summit on Brexit in November.”
The pound is trying to hold ground against the euro and is trading at €1.138 at 8:30 BST, according to data from Bloomberg.
While this is down on opening levels of €1.140, it is an improvement of €1.136 recorded yesterday.
After news of the summit being cancelled, the Prime Minister stood defiant against criticism from EU chiefs by claiming she had made good progress overnight.
Mrs May told reporters this morning that extending the transition period will not be necessary, and reiterated aims for the process to be finished by 2020.
She said: “As I said, we have made good progress on withdrawal agreement and future partnership.
“The original proposal put forward by the EU was one we could not have accepted in the UK, it would have created a customs border down the Irish sea.
“Earlier in the year, we put forward a proposal as how to deal with this issue – a further idea has now emerged.
“A further idea at this stage is to extend the implementation period for a matter of months and only for a matter of months but the point is this is not expected to be used – because we are working to ensure we have that future relationship in place by the end of December 2020.
“I am clear that it is possible to deliver – there will be no need for any proposal of this sort – and the implementation will end by the end of 2020.”
The Irish border has been the main row erupting as both sides struggle to reach a deal, with disagreements on how trade and free movement of goods will work.
EU negotiators are said to be demanding a “backstop to the backstop” to prevent a return of a “hard border”.
While Mrs May is said to be proposing a scenario for “the whole UK to participate in a customs union with the EU” if no other answer for the Irish border is found.
Mrs May told the leaders she was committed to “legally operative backstop” contingency measures to prevent customs checks on the Irish border in the event of a failure to agree details of the future trade relationship between the UK and the EU before the end of Britain’s transition out of the bloc.
Britain was ready to work with the EU to find “a creative way out of this dilemma”, she told the leaders.
EU leaders will reconvene for talks on migration and security today.