Sterling was seeing its best week since January, as investors waited for next week’s parliamentary vote on Prime Minister Theresa May’s deal to exit the European Union.
Sterling has rallied this week – it is up 1.7% against the dollar – after British politicians voted against leaving the EU without a deal and backed a delay to the March 29 exit date.
The vote against a no-deal Brexit was non-binding, but investors believe Britain will now avert a disorderly Brexit that would severely damage its economy.
May has said she will hold another vote next week on her deal, although MPs have already rejected it twice.
She hopes to use the threat of a longer delay to Brexit to persuade eurosceptics in her party to back her.
The pound, which has traded between $1.2945 and $1.3380this week, was unchanged this afternoon at $1.3240.
It was also little changed against the euro, losing 0.1% to 85.50 pence per euro.
But uncertainty still looms ahead for sterling.
All 27 EU member states must agree to a request for a Brexit extension, and it remains unclear when and on what terms Britain will leave.
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