The pound slipped slightly against the dollar today, but held close to the six-week highs it hit in the previous session following news that stalled Brexit negotiations were due to resume.
Sterling rose by as much as 1.7% against the dollar yesterday after the European Union's chief negotiator Michel Barnier said that a deal was "within reach".
It held close to those highs today, with the Brexit trade talks due to resume in the afternoon after negotiations were halted abruptly last week.
Francesco Pesole, foreign exchange strategist at ING, said that although the pound was rising and falling in response to comments about Brexit, the size of the moves was limited by a lack of certainty about the likelihood of a deal.
"Right now markets are just waiting for the tangible news, the real material progress to really buy and sell the pound," he said.
The pound, which reached as high as $1.3177 yesterday, was at $1.3113 today, down around 0.3% on the day.
Against the euro, the pound was slightly stronger on the day, at 90.23 pence, having strengthened to as much as 90.115 pence per euro in the previous session.
Britain left the EU in January and is currently in a status-quo transition period which ends on December 31.
British Prime Minister Boris Johnson said last week that the trade talks were over and told businesses to get ready for a no-deal outcome - comments that caused sterling to fall initially but were soon dismissed by market players as brinkmanship.
"Market participants were never convinced by the political posturing as the pound held its ground, and they are now more convinced that both sides are heading towards a trade deal," MUFG currency analyst Lee Hardman wrote.
