The pound rose as much as 0.7% to $1.2699 and by a similar magnitude against the euro to 86.90 pence after Michel Barnier said a deal was still possible.
Sterling came off those highs after Barnier said a deal, while achievable this week, was more and more difficult, Reuters reported.
The British currency has enjoyed a huge rally since late last week, when London and Brussels said they would restart intense negotiations to try and agree a Brexit deal before Britain's scheduled departure date of Oct. 31.
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