Hopes of progress in U.S.-China trade talks and optimistic comments from Europe on Brexit pushed back the safe-haven yen and lifted the British pound and euro early on Friday.
Sterling was the biggest mover overnight, jumping 2% to a two-week high versus the dollar and posting its largest daily percentage gain in seven months on hopes of a Brexit resolution.
Irish Prime Minister Leo Varadkar said on Thursday a Brexit deal could be clinched by the end of October to allow the United Kingdom to leave the European Union in an orderly fashion, after what he called a very positive meeting with Boris Johnson.
Ireland is a major factor in the prolonged Brexit impasse.
Sterling last traded at $1.2431, having risen up to $1.2469 on Thursday.
Against the euro, the pound also rose to two-week highs of 0.8831 pound to the euro on Thursday and last stood at 0.8858.
The euro also gained against the dollar, rising to $1.1007 . It had climbed as high as $1.1034 in U.S. trade on Thursday, its strongest in almost three weeks.
That helped to send the dollar index to 98.709, a low last seen on Sept. 25.
The yen eased to 107.92 yen to the dollar, having shed about 0.45% the previous day.
Top U.S. and Chinese negotiators wrapped up a first day of trade talks in more than two months on Thursday, as business groups expressed optimism the two sides might be able to ease a trade war and delay a U.S. tariff hike scheduled for next week.