The pound gained ground on Monday as traders pinned their hopes on a fresh Brexit deal being presented to Parliament this week
Sterling climbed 0.94% on the euro to 1.169, and was up 0.94% versus the US dollar at 1.314.
But the stronger currency trimmed gains for London’s top-flight stocks, which typically benefit from a weaker pound.
The FTSE 100 index closed up by 26.31 points, or 0.37% higher, at 7,130.62.
Commenting on the pound’s movement, Connor Campbell – a financial analyst at spreadbetter SpreadEx – said: “It appears that sterling is clinging onto the somewhat disputed reports that Theresa May is set to travel to Strasbourg this Monday in order to meet with Jean-Claude Juncker and finalise some kind of Brexit deal, one that would presumably then be presented to Parliament on Tuesday.”
The Prime Minister began her journey to Strasbourg just after the market closed on Monday.
Meanwhile, the FTSE 100 was higher, along with its European peers, as global sentiment trended slightly positive in the absence of any major economic updates.
The German Dax was up 0.75% and the French Cac was 0.66% higher.
David Madden, market analyst at CMC Markets UK, said: “European equity markets are in positive territory heading into the close.
“There hasn’t much in the way of major macro-economic news, but sentiment is still a little on the optimistic side in light of the mixed US jobs report on Friday, and investors have digested the European Central Bank’s update from last week too.
“Investors are still waiting to hear further details in relation to the US-China trade situation.”
In London, Superdry launched an assault on the fashion chain’s co-founder, Julian Dunkerton, branding his attempt to return to the company “extremely damaging”.
The retailer said on Monday that a shareholder meeting to decide whether to reinstall Mr Dunkerton on the board will take place on April 2, and recommended that investors vote against his return.
Shares in the company were 7.5p lower at 514.5p.
Boardroom drama also continued to simmer at Debenhams, which confirmed it is in advanced talks to borrow £150 million as part of efforts to stay afloat, just days after Mike Ashley launched an aggressive bid to seize control of the retailer.
Shares dropped 0.04p to 3.49p.
There was further acrimony from Provident, which hit out at Non-Standard Finance’s (NSF) £1.3 billion takeover approach for a second time, labelling it “financially flawed”.
Provident’s share price climbed 12.4p to 570p while NSF’s stock was unchanged.
Meanwhile, Charter Court Financial closed higher after confirming it is in in advanced talks with OneSavings Bank over a possible £1.6 billion merger.
Oil prices were higher as Saudi Arabia committed to output cuts, keeping exports below seven million barrels per day.
A barrel of Brent crude oil was trading 1.2% higher at 66.48 US dollars.
The biggest risers on the FTSE 100 were NMC Health up 96p to 2,684p, Paddy Power up 175p to 5,700p, Smurfit Kappa up 60p to 2,172p and Schroders up 68p to 2,609p.
The biggest fallers on the FTSE 100 were Persimmon down 61p to 2,187p, Admiral Group down 40p to 2,100p, Hiscox down 28p to 1,586p and Auto Trader Group down 8p to 469.1p.