The pound rose towards a three-week high yesterday after Britain's Labour opposition said it would try to introduce parliamentary legislation to block a no-deal Brexit.
The scrap for leadership of the Conservative Party has seen candidates court the party's mostly Eurosceptic base, including by downplaying the risks of a crash-out Brexit on October.
Investors are concerned the next prime minister could put Britain on course for a no-deal divorce with the European Union that would send the pound plummeting.
Frontrunner Boris Johnson, a eurosceptic, has said he would be willing to take the nation out at the end of October, even if it meant leaving without a deal.
But the Labour Party debated a motion to seize parliamentary time on June 25 to give lawmakers the chance to introduce legislation that will prevent such a no-deal Brexit.
"With the risk of a new leader with a new mandate behind a (somewhat) more unified Conservative Party, the opposition must make hay with mayhem while they can. By forcing this issue today, candidates must clarify where they stand on Brexit," said Helen Thomas, of Blonde Money.
Jeremy Hunt, one of the candidates vying to succeed Theresa May, said the British parliament would likely block a no-deal Brexit.
The pound was up 0.1pc at $1.2731, close to a three-week high of $1.2763 hit on Friday. It was flat against the euro at 89 pence.
The air of unreality surrounding the UK administration ahead of Brexit means currency traders have largely ignored economic data releases in Britain, believing the Bank of England is unlikely to change interest rates until the UK decides how, when and even if it will leave the European Union.
Meanwhile, a survey of British migrants living elsewhere in the EU has found those living in Ireland are most fearful of a crash-out Brexit. Almost half of Britons living in Ireland expect their personal economic situation to worsen in the next 12 months, compared to just 34pc of their compatriots in other EU countries.
The YouGov survey for CurrencyFair shows British people in Ireland are most likely to expect a recession, followed closely by British citizens at home.
Two-thirds of UK citizens here said they'd choose to live in Ireland over any other countries in the EU.