LONDON: Sterling extended its gains on Tuesday after British cabinet office minister David Lidington said a Brexit agreement was still possible in the next 24 or 48 hours.

Sterling jumped half a percent to as high as $1.2917  from around $1.2870 before Lidington's comments.

The pound rose 0.2 percent versus the euro at 87.11 pence .

The British currency had tumbled on Monday on signs an agreement with Brussels on the terms of the UK's exit from the European Union was still some way off.

Prime Minister Theresa May said on Monday talks were nearing their endgame but considerable issues remained unresolved with the European Union.

"Amid talk that this week could be the Cabinet's last chance to secure an agreement to present at a November EU summit, Ms May's proposals are tasked with healing an increasingly divided Conservative party while also keeping the party's DUP allies onside," said Neil Mellor, currency strategist at BNY Mellon, referring to the Northern Irish Democratic Unionist Party.

The pound on Monday hit its lowest, at $1.2827, since Nov. 1 against the dollar. Versus the euro it remains close to a 6 1/2- month high of 86.91 pence touched last week, reflecting some optimism a Brexit deal will be agreed.

British employment data and wage growth numbers are due to be released at 0930 GMT.