The pound was broadly flat at $1.3038 but was set to rise 1.2 percent for the week, breaking three consecutive weeks of losses. On a weekly basis, it was also the best performing currency among its major rivals.

The European Union's Brexit negotiator, Michel Barnier, said on Friday he could not rule out the possibility that Britain's EU withdrawal be pushed back.

Britain is due to leave the EU on March 29, but Prime Minister Theresa May is seeking further concessions on her Brexit deal in hope of winning the support of lawmakers before putting it to another vote in parliament.

If she fails, May will have to decide whether to delay Brexit or endanger the world's fifth largest economy by leaving without a deal.

May has promised to give parliament a chance to decide what to do about Brexit on Feb. 27 unless she can bring back a deal.

Optimism about some sort of a imminent breakthrough is reflected in the currency derivatives markets with one-month pound risk reversals, a gauge of calls to puts on the pound, rising to one-month highs.

However, some analysts say the upside is limited for the pound in the short term as a deeply divided parliament might present significant hurdles for any concessions that May can wrangle out of the European Union.

"The EU might make some concessions if it would help May to pass the bill through parliament, but unless May tells them what will pass, there's no reason for them to budge," said Marshall Gittler, chief strategist at ACLS Global.