Sterling hovered just off two-month highs against the euro and the dollar on Thursday as uncertainty crept back in a day after British Prime Minister Theresa May won a confidence vote in parliament.
Lawmakers backed May's government 325 to 306, just 24 hours after handing her European Union withdrawal deal a crushing defeat that left Britain's exit from the bloc in disarray.
The pound has strengthened in recent weeks on growing confidence that a no-deal or hard Brexit is unlikely, touching a two-month high to the euro on Wednesday and a similar milestone against the dollar on Monday.
By 09:15 GMT, the pound dipped 0.1 percent to $1.2866 , holding below a two-month high hit on Monday just above $1.2930.
Against the euro, sterling also dipped 0.1 percent to 88.56 pence, having strengthened to around 88.40 pence in the previous session.
After the confidence vote late on Wednesday, May met several party leaders, but the main opposition leader, Labour's Jeremy Corbyn, refused to hold talks unless a no-deal Brexit was ruled out.