The pound was trading at six-month highs against the euro as investors celebrated news of a Brexit breakthrough in Brussels.
Sterling was up nearly 0.3% versus the eurozone currency to around 1.148, hitting its highest level since June 7 when it pushes through 1.15.
Its gains against the greenback were relatively subdued, up 0.1% at 1.348.
Lukman Otunuga, a research Analyst at forex broker FXTM, said: "An agreement between the United Kingdom and Ireland on the post-Brexit Irish land border is likely to come as a breath of fresh air for sterling, as a major obstacle for opening trade talks with the EU will be eliminated."
The Commission's announcement came after Prime Minister Theresa May and Brexit Secretary David Davis made an early-hours journey to Brussels to meet European Commission president Jean-Claude Juncker and the European Union's chief Brexit negotiator, Michel Barnier.
Business groups reacted with relief to the news.
Stephen Phipson, chief executive of the manufacturing body EEF, said:
"Many employers will be relieved that their EU employees have more certainty going forward, and Government must now clarify the rights of EU citizens by Christmas so that they are not concerned about their future."
He stressed that it was "one step forward in a complex and long process."
Attention will now turn to trade and Mrs May faces another race against the clock to secure a trade deal that delivers the "exact same benefits" of the single market, which her Government has promised the British electorate.
Britain is due to exit the single market and customs union in 2019.
Mr Phipson said businesses are still waiting for news of a transition deal that would extend market access beyond that date.
"We need to pin down the transition arrangements which will be in place after March 2019, to ensure it's business as usual for companies for as long as it takes until a final deal is reached.
"Until we get to that point, many businesses will need to prepare for any and every eventuality."
Unsurprisingly, Connor Campbell, a financial analyst at SpreadEx, said market excitement will likely be short-lived.
"Though inarguably pretty damn healthy, this early growth does suggest a level of reticence from investors, who appear to be taking on board Donald Tusk's warning that the real hard part - ie the forging of a new relationship between the UK and EU - is still to come."