Sterling rose sharply on Monday in volatile trade after media reports said that Prime Minister Theresa May was preparing to offer an amended version of her Brexit deal to parliament in a key vote on Tuesday.
Sterling’s strength on Monday – which follows eight consecutive days of losses – was also due to increased bets on Brexit being delayed and a no-deal or economically damaging “hard” Brexit being averted.
Sterling was up 1 percent at $1.3150. It was also up 0.9 percent against the euro at 85.53 pence.
The pound has weakened in recent weeks as doubts swirl over how, or possibly even if, Britain’s exit will take place.
Traders are expecting big swings in the currency around this week’s votes, according to a sharp rise in one-week implied volatility.