Sterling saw its biggest gains since the 2008 financial crisis today as Prime Minister Theresa May promised a parliamentary vote on Britain's deal to leave the EU and said it would seek to stay a key European partner. 

The pound was already up more than 1% as Theresa May began a keenly-awaited speech that had been extensively leaked to media.

It then surged 2.5% on the day to a 10-day high of $1.2343 in the minutes that followed.

It had gained 1.9% to 86.32 pence against the euro by 6.30pm.

Dealers reported a widespread squeeze on short positions - or bets against sterling - taken in derivatives markets in the past few days. 

One media report at the weekend had quoted a Downing Street source as predicting May's speech would trigger a significant correction in the pound.

Until today's action most had assumed that would be downward not upward.

Meanwhile, the FTSE 100 share index, which has tended to rise as sterling dropped in a series of sell-offs since the vote for Brexit last June, extended an early fall led by exporters and mining companies as May spoke. 

The British Prime Minister said she wanted to avoid a "disruptive cliff edge" for businesses when Britain leaves the European Union and backed a phasing-in of changes in immigration, customs and regulation in areas such as financial services. 

Analysts said that while today's speech has given some direction, the real test will come when Article 50 is triggered.