LONDON: Sterling rose to a one-week high on Monday as traders prepared for the British parliament to reconvene this week and debate Prime Minister Theresa May's Brexit withdrawal agreement.

The pound's strength at the start of the week was largely down to dollar weakness, with a recovery in global risk sentiment since Friday knocking demand for the U.S. currency .

Traders expect the week two weeks to be highly volatile for sterling. A vote on May's Brexit deal - which she has said lawmakers must back if Britain is to avoid a disorderly Brexit in March - will be held on Jan. 15 following the parliamentary debate, the BBC reported.

Mixed signs on the momentum in Britain's economy continue to be overshadowed by investors angst about the sort of Brexit Britain is headed for.

While a majority of British lawmakers want to avoid a disorderly crash out of the trading bloc, a majority are also opposed to May's deal. The prime minister postponed an earlier planned vote because she faced losing heavily.

"For now, the prospect of getting the bill through seems no better than when the last scheduled vote was postponed in December," RBC's chief currency strategist Adam Cole said.

Sterling rose to as high as $1.2754, up 0.3 percent on the day, before settling at $1.2740.

Against a broadly stronger euro the pound shed 0.3 percent to 89.845 pence.