Sterling bounced back from near 12 month lows today following some developments on the Brexit negotiations front.
EU chief Brexit negotiatior Michel Barnier was quoted by Reuters as saying the EU was prepared to offer a partnership with Britain 'such as has never been with any other third country.'
The UK Brexit Secretary said a deal was "within our sights" on the terms on which Britain will leave the bloc.
Asked whether a deal would be reached at an EU summit in October, Dominic Raab said that remained his goal, but that there was "a measure of leeway" over the exact timetable.
Earlier, the pound fell to a one-year low against the euro following days of aggressive selling.
The pound fell to its lowest level since September 11, 2017 against the euro after British Prime Minister Theresa May played down the consequences of leaving the European Union next year without securing a deal with the bloc.
May's comments - seen as undermining Finance Minister Philip Hammond's warnings about the economic damage from a "no-deal" Brexit - piled pressure on the pound and pushed it sharply lower against both the dollar and the euro.
Her comments came as France's Prime Minister Edouard Philippe asked his ministers to prepare contingency measures in case of a no-deal Brexit.
In currency derivatives markets, traders have slowly started to bet on sterling weakening against the euro, and large option expiries are building up around the 91-pence level.
Foreign exchange analysts have forecast that the pound will weaken to $1.20 in the event of a no-deal Brexit, a Reuters poll found this month.
"The rhetoric from the UK government since going in to recess has become more accepting of a no-deal scenario and is a big part behind sterling's weakness," said John Marley, a senior currency consultant at FX risk management specialist, Smart Currency Business.
