Sterling edged higher on Friday after falling to a near two-week low in the previous session as investors waited for a long weekend of headlines on the progress of Brexit negotiations between the European Union and British officials.
The British currency was up 0.1 percent at $1.31. Against the euro, it was broadly steady at 85.53 pence.
With less than three weeks to go before Britain leaves the EU, officials are at an impasse over the so-called backstop aimed at ensuring that there is a frictionless border between Northern Ireland and Ireland.
Lawmakers will vote again on the deal next week. British Prime Minister Theresa May will say on Friday that the EU should give ground in discussions over the backstop before then to help it go through.
Uncertainty over whether British lawmakers will support May’s deal next week is showing up in the currency derivatives markets, with one-month implied volatility rising to its highest levels since mid-January.
The EU has told Britain to rework its backstop proposal by Friday, but a British source said on Thursday that the Brexit impasse was unlikely to be broken before the weekend because the EU was not moving.
