The pound has rallied as talks between the UK and EU on a Brexit free trade agreement show signs of progress after Sunday's deadline for a deal was extended.
Sterling recorded its largest one-day leap for a fortnight in Asia trading versus the US dollar to trade just above $1.33 - a cent higher - after a sharp slide last week as the clock ticked down to the weekend with no breakthrough in sight.
The UK currency was also hovering slightly below €1.10 against the euro.
The rally extended beyond 1.6% as Monday's trading shifted to London - with the $1.34 barrier being breached amid signals in Brussels that progress was being made.
But market analysts warned the pound's recovery was tentative as investors closely watch developments.
London and Brussels agreed on Sunday to "go the extra mile" in the coming days to try to reach an agreement aimed at limiting disruption after the Brexit transition period ends on 31 December.
A no-deal Brexit would result in the UK and EU trading under World Trade Organisation rules that would see tariffs and quotas imposed on both sides at a time when economies are already reeling from the COVID-19 crisis.
The announcement that the deadline for a deal had slipped was both welcomed and criticised by business groups in equal measure given the continued lack of clarity on the incoming rules for the end of the month.
The director-general of the British Chambers of Commerce, Dr Adam Marshall, said: "This is a very frustrating time for business as they anxiously wait for decisions about the terms of trade with the EU come Jan 1.
"If a few more hours or days makes the difference, keep going - and get an agreement that delivers clarity and certainty to businesses and trade on both sides.
"Businesses will need time and support to adjust in a New Year like no other - whatever the eventual outcome."
No industry has been more desperate to avoid tariffs than the UK car manufacturing sector.
It has forecast a ruinous £55bn hit over five years in the event of a no-deal scenario.
Mike Hawes, chief executive of industry body the SMMT, said: "We welcome the commitment from both sides to continue talking and find a way through the political impasse - we now need negotiators to finish the job and agree the deal we all so desperately need, without further delay.
"No deal would be nothing less than catastrophic for the automotive sector, its workers and their families and represent a stunning failure of statecraft. Quite simply, it has to be ruled out."
Another part of the UK economy clamouring for a deal is retail - with physical stores, like car sales, enduring horrific dents from coronavirus disruption in 2020.
It moved to reassure shoppers that there would be no need to repeat pandemic-style panic buying of essentials such a toilet rolls in the run-up to the 1 January deadline as supermarket chains had prepared for a no-deal situation.
Chief executive of the British Retail Consortium, Helen Dickinson, said: "The 11th hour has passed and every passing moment of uncertainty makes it harder for businesses to prepare effectively for the 1st January.
"Without a deal, the British public will face over £3bn in food tariffs and retailers would have no choice but to pass on some of these additional costs to their customers who would see higher prices filter though during 2021."
