Sterling briefly jumped to a two-week high on Monday on growing hopes of a smooth Brexit.
With just five months to go until Britain exits the European Union divorce talks are at an impasse, a Sunday Times report that an all-UK customs deal will be written into the agreement governing Britain's withdrawal from the European Union was enough to send the pound to $1.3062, its highest since Oct. 22.
May's office said the Sunday Times report was speculative, but added that 95 percent of the withdrawal agreement was settled and negotiations were ongoing.
The pound pared gains to be last up 0.1 percent at $1.2989 after UK's Telegraph newspaper reported significant hurdles still remain in the Brexit negotiation process.
The U.S. dollar struggled on Friday. The dollar index , which measures the greenback against a basket of major currencies, was last off 0.1 percent at 96.459.
Against the safe haven yen, the dollar held at 113.25 . The euro was flat at $1.1389.
In commodities, oil prices fell as the start to U.S. sanctions against Iran's fuel exports was softened by waivers that will allow some countries to still import Iranian crude, at least temporarily.
U.S. crude fell 36 cents to $62.78 per barrel and Brent was last at $72.49, down 34 cents.
