FILE PHOTO: British five pound banknotes are seen in this picture illustration taken November 14, 2017. REUTERS/ Benoit Tessier/File Photo

Sterling has hit its highest level since November, pushing above $1.30 against the dollar, as the opposition Labour party signalled it could support legislation to delay Britain’s departure from the EU beyond the scheduled date of March 29.

The pound jumped by 0.9 per cent on Wednesday afternoon to $1.307, setting up its biggest one-day gain in six weeks.

John McDonnell, the shadow chancellor, said on Tuesday evening that a proposal by backbench MPs to stop a no-deal Brexit by delaying the divorce date was “sensible” and “highly likely” to receive Labour’s support.

The pound also appreciated against the euro, pushing the single currency down 0.5 per cent to £0.8720. Stephen Gallo, head of European FX strategy for BMO Capital Markets, said the move is likely to be a short-term surge, however, with opportunities to sell the pound at higher levels likely to arise soon.

“It’s just noise at this stage because having an extension to Article 50 doesn’t mean that there is a new solution to Brexit,” Mr Gallo said.

Still, investors are happy to take all news pointing to the possibility of the UK avoiding crashing out of the EU without a deal as a cue for buying the pound, said Jane Foley, head of FX strategy at Rabobank.

“A hard Brexit is absolutely not priced in to the pound. This means that any headlines that support the consensus view that a no-deal Brexit is going to be avoided is taken as a positive,” Ms Foley said.

Several groups of MPs have proposed amendments to Theresa May’s parliamentary motion about her plan B exit deal in an effort to seize control of the process.

The biggest group of cross-party MPs, led by Labour’s Yvette Cooper and the Conservative Nick Boles, has proposed legislation that would give MPs a vote on extending the Article 50 exit process if they have not agreed to the government’s deal by February 26.

The proposal is expected to be voted on next Tuesday, along with other procedural measures.

The Cooper-Boles amendment is expected to pass the House of Commons, because both Labour and pro-EU Tories have suggested they will back it. Some MPs are sceptical of the amendment, however, arguing that it is convoluted and would not legally bind the government.

The government opposes the amendment. Theresa May, the prime minister, said in the Commons: “Extending Article 50, I don’t believe, resolves any issues because at some point members of this House have to decide whether they want to have a no-deal situation, agree a deal or have no Brexit.”

Liam Fox, the international trade secretary, said earlier on Wednesday that attempts to block a no-deal departure posed a “real danger” to the British constitution.

Michel Barnier, the EU’s chief Brexit negotiator, also said on Wednesday that Britain was still on course to crash out of the bloc without a deal in March unless a “positive majority” emerges in the Commons to prevent it.

“Opposing a no deal will not stop a no deal happening at the end of March,” he told an assembly of EU employers and trade union representatives in Brussels. “To stop a no deal, a positive majority . . . needs to emerge.”

If passed, the Cooper-Boles amendment would probably force a rethink among some Eurosceptic MPs, who have until now taken comfort from the idea that they can vote against Theresa May’s deal without preventing the UK from leaving on March 29.

Jacob Rees-Mogg MP, chairman of the European Research Group of Eurosceptic Tory MPs, is expected to say in a speech on Wednesday that he and his colleagues might eventually rally behind Mrs May’s plan, according to Nomura analysts who said they had seen leaked extracts.

“It is all pretty positive stuff. It feels an incremental move to a situation where either the ERG will fold and May’s deal gets through or we are talking about a long extension,” Nomura analysts said.

Additional reporting by Jim Brunsden in Brussels

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