The British currency has weakened sharply this week as lawmakers returned from an Easter recess with little sign of progress in May's efforts to convince them to back her Brexit deal.

Britain's departure date from the European Union has been pushed back until as late as end-October, but sterling traders are concerned about political uncertainty in the meantime, the impact on the economy and a renewed push for May to step down.

"The implied probability of Brexit happening by end-June has changed little subsequent to suggestions that PM May could bring the WA (Withdrawal Agreement) back to the Commons next week," said RBC's chief currency strategist Adam Cole.

"Elsewhere, (Boris) Johnson is racing ahead as favourite for next PM as perceived risk of an early election continues to diminish."

Sterling edged 0.1 percent higher to $1.2903, its weakest since mid-February. Against the euro, the pound dropped 0.1 percent to 86.36 pence.

The dollar, which rose towards a two-year high against rivals as economic data points to a US economy outperforming other countries, also weighed on the pound.