It is looking more likely that Article 50 could be extended, which in turn would help rule out a No Deal exit from the EU.
Sterling had climbed to 1.304 against the dollar at the time of writing at 1pm today – up from 1.279 on November 23.
Meanwhile, the pound stood at 1.147 against the euro compared to 1.129 on November 23.
This can lead to temptations in buying your holiday money now, but an expert predicts that the pound will climb even higher.
Although, the risk of it dropping again from a hard exit from the EU "cannot be ruled out".
The pound is also still sitting far away from levels seen before the EU referendum, which led it to drop to a 31-year low.
If you do want to buy your holiday money now then make sure you only buy half, to safeguard yourself against further falls or rises.
Michael Brown, senior analyst at currency firm Caxton FX, said: "Sterling has recorded further gains this morning, hitting fresh two-month highs against the dollar and euro, after rumours emerged of the Labour party backing an amendment to the Withdrawal Agreement.
"This would see the article 50 negotiating period extended should a deal fail to be agreed, thus ruling out a no-deal exit from the EU."
"This morning’s move in the pound underlines how the market is pricing in a softer outcome to negotiations than previously thought with the pound also being underpinned by attempts to avoid a no-deal exit."
"While such rumours are yet to be confirmed, further upside for the pound is likely if the headlines prove true," Brown added.
"However, the risk of a move to the downside from a harder exit cannot be ruled out."
The pound suffered its biggest fall of the year in November as Dominic Raab quit over "blackmail" Brexit.
But it started climbing again against the euro and dollar after the Brexit vote last week.
How can I get the best currency rates?
- Don’t buy cash at the airport – you’ll always be able to beat the rate with a bit of forward planning.
- Compare travel money companies online – factor in delivery costs and choose the option that gives you the most cash to spend on holiday. If you’ve left it until the last minute order online for airport collection so you get the best of both worlds.
- Use comparison tools – MoneySavingExpert’s TravelMoneyMax enables you to compare pick-up and pre-order rates.
- Don’t pay for travel money with a credit card – it’s likely you’ll be charged a cash withdrawal fee which adds to the cost.
- Top up a prepaid card to lock in your rate now – choose your card and read the T&Cs carefully as some apply hefty fees. WeSwap, FairFX and Caxton FX are all worth checking out.
- Always choose to pay in the local currency rather than sterling – this will help you avoid sneaky exchange fees.
When there are fluctuations in currency, it can impact holidaymakers meaning they get more or less buck for their pound.
Here are the latest odds of a no-deal Brexit and whether there'll be a second referendum on Britain's EU membership.
Plus, we look at how a second Brexit vote could happen.
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