Sterling jumped as Prime Minister Theresa May struck an emollient tone towards the European Union as the UK begins the process of leaving the EU.
In a statement to the House of Commons May emphasised the need for a trade deal that allowed EU and UK firms to continue to do business.
May said: "I want us to be a truly Global Britain – the best friend and neighbour to our European partners, but a country that reaches beyond the borders of Europe too.
A country that goes out into the world to build relationships with old friends and new allies alike.
The Prime Minister affirmed the government will not seek to weaken the EU, saying the UK will pursue "a partnership that works in the best interests of the United Kingdom, the European Union and the wider world."
During volatile trading sterling reached highs of €1.1595 against the euro at the time of writing after trading at points last night below €1.45.
Against the dollar pound rallied after falling on Tuesday to reach highs of $1.2476 against the US dollar at the time of writing. However, it then pared those gains.
May said: “It is in the interests of both the UK and the EU that there should be as little disruption as possible.” However, she did not add more detail on whether the government will seek a transitional deal.
The pound has fallen briefly below $1.24 against the dollar overnight, while the trade-weighted dollar index made back some of last week’s losses from the failure of US President Donald Trump’s healthcare bill.
The relatively small rally in sterling likely reflected traders being reassured by the Prime Minister's tone, according to Craig Erlam, senior market analyst at Oanda. He said: "The markets were a bit overextended to the downside."
Prospects for the pound will be tied to the negotiation process and the market's judgements of a trading deal guaranteeing easy access for businesses.
"There is going to be consistent volatility while these negotiations take place," Erlam said.