The British pound rose on Thursday, bouncing off four-week lows, after a media report that Ireland is backing Prime Minister Theresa May's plan for an all-UK customs union with the European Union.
Backing from Dublin could help Britain towards overcoming one of the thorniest issues in the Brexit negotiations, a 'backstop' deal on the border between Northern Ireland, part of the United Kingdom, and EU-member state Ireland.
Ahead of an EU summit this month, Ireland is prepared to back one of May's proposals if no other solution to the Irish border issue is found - the whole of the UK to operate within a customs union with the EU, the Financial Times reported.
After hitting as low as $1.2922 overnight - its weakest since Sept. 10 - on the back of a surging dollar, sterling recovered to $1.2967, up 0.2 percent on the day.
Britain's currency also gained versus the euro, and was up 0.2 percent at 88.61 pence.