Sterling bounced back from an eight-day low against the euro today, with investors hopeful of a breakthrough in Brexit negotiations.
This comes after British prime minister Theresa May won a modest reprieve in stalled talks with the European Union.
EU leaders said at a summit in Brussels that they would begin preparations to move into the second phase of Brexit talks in December, a step forward that would allow London to discuss its future trade relationship with the bloc.
May said EU leaders need not be concerned about the current budget plans and that Britain would honour the commitments it had already made as a member of the bloc.
She also said that she was optimistic about winning a good Brexit deal.
The pound strengthened to 89.355 pence against the euro, having earlier dipped to its weakest since October 12. That left it up 0.8% on the day.
Against a stronger dollar, the pound recovered from a two-week low, trading up 0.3% on the day at $1.3199.
For the week, though, it was down around 0.6%, having been pushed lower by a combination of weak data and comments from BoE policymakers that markets have interpreted as dovish.
Although investors are still largely expecting a 25 basis-point interest rate hike will come at the Bank of England's next policy meeting on November 2, doubts are growing about future rate rises.
Retail sales volumes, a key component of the UK economy, fell 0.8% in September, dragging quarterly growth to its weakest annual rate since 2013, data showed earlier this week.
This raised concerns that the economy was too weak to stomach a rate hike, which would be the first since 2007.
The next major data point for the pound will be UK third quarter GDP numbers, which are due on Wednesday.
