Against the dollar, the pound climbed more than 0.4 percent to $1.2824 in early London trading before trimming gains to stand 0.3 percent up on the day at $1.2796.

US President Donald Trump and China's President Xi Jinping have agreed a 90-day ceasefire in their trade dispute during which they will try to resolve their differences.

In a sign that the pound's gains were broadly due to a relief rally across markets rather than a major shift in market positions over Brexit negotiations, the pound was broadly flat against the euro and the Swiss franc.

Stephen Gallo, European head of FX strategy at BMO Capital Markets, said the heightened chances of political uncertainty on the back of increased resistance from British politicians should pressure the pound lower in the coming days.

"One thing we are absolutely certain of is how much the recent pound stability belies the tension raging beneath the surface; things are only going to get rougher from here," he said in a note to clients.

Opposition parties, the small Northern Irish party that props up May's government and many lawmakers in her own Conservative Party have said they will vote against the deal on Dec. 11.

Such concerns have also started bubbling up in the currency derivatives market where 14-day implied volatility on the pound , a gauge of expected swings in the pound over the next two weeks, has climbed as investors have started betting on a more volatile pound.