The pound rose against the dollar and euro, stabilising somewhat after recent falls, as investors waited for a key Brexit vote.
Sterling had its worst week in six months last week, as investors grew more pessimistic about the chances of a Brexit deal being reached before the December 2020 deadline.
Britain threw Brexit talks into disarray last week by proposing legislation that would break international law by breaching parts of the Withdrawal Agreement which was signed in January.
Lawmakers are due to debate and vote on the proposed bill, called the Internal Markets Bill, today.
The EU says it cannot trust those who break agreements and that if the bill is not effectively scrapped there will be no trade deal to cover Britain when it leaves the customs union and single market at the end of 2020.
Goldman Sachs said that the chances of a damaging no-deal Brexit are “meaningfully lower” than the market is implying and that sterling levels are attractive for investors who are willing to look through the short-term volatility.
Expectations of negative interest rates were also weighing on the pound. The Bank of England will meet on Thursday.
Elsewhere, tighter restrictions on social gatherings in England came into effect on Monday, after coronavirus infections in the UK rose to around 3000 per day.
Shares in British drug maker AstraZeneca rose after it received the go-ahead to resume clinical trials for its COVID-19 vaccine candidate.