Sterling fell on Monday after MPs voted to delay passing British Prime Minister Boris Johnson's Brexit deal, though losses were limited by hopes the country can eventually avoid crashing out of the EU without a divorce agreement in place.
The House of Commons sat on a Saturday for the first time in almost four decades to consider Johnson's deal in a vote that was seen as a potential turning point in the long-running Brexit saga.
But instead of delivering a verdict on the deal itself, lawmakers voted to force Johnson to ask the European Union for another Brexit delay, hoping to avoid crashing out of the bloc on October 31 with no agreement in place.
Johnson reluctantly agreed, although the EU is yet to respond to the request and Britain's conservative government insists it is still committed to exiting by month's end.
The prime minister is hoping to bring the deal back to the House for a vote on Monday but that might fall foul of parliamentary procedure, with Speaker John Bercow to rule on it later.
In early Asian trade, the pound -- which last week hit five-month highs on optimism for a deal -- dropped 0.6 percent against the dollar and the euro.
However, Stephen Innes, Asia-Pacific market strategist at AxiTrader, said: "The fact Sterling has proven surprisingly resilient... buttresses well for risk sentiment."
Saturday's vote meant more waiting for traders, Shinichiro Kadota, exchange strategist at Barclays Securities in Japan, told AFP.
"There had been hopes late last week that this issue would finally see a settlement. But now it's been shelved," he said.
"The pound rallied to close to $1.30 from $1.22... We can say it is holding firm, which shows hopes (for avoiding no-deal Brexit) have not been dashed."
- 'Substantial progress' -
Rodrigo Catril, a senior forex strategist at National Australia Bank said the market was not in "wait-and-see mode".
"We saw the pound lose a little bit of ground, but from the perspective of what it's gained over the past week, that's really minimal," he told AFP.
Catril said it appeared a deal would be done before October 31 but a great deal of uncertainty remained, including the possibility of a "confirmatory vote", or second Brexit referendum.
Asian equity markets were a mixed bag after China's top trade negotiator Liu He said at the weekend that Beijing and Washington had made "substantial progress" towards wrapping up a partial trade deal announced earlier this month.
The deal offered China a temporary reprieve from tariffs planned for mid-October, while Beijing said it would hike purchases of US agricultural goods.
But it did not roll back any of the duties already imposed on hundreds of billions of dollars in exports to the US, nor address another round of levies due in December.
Still, the upbeat comments provided a boost to the yuan, which rose 0.2 percent against the dollar.
And Brett Ewing, chief market strategist at First Franklin Financial Services, told Bloomberg TV: "It would be significant if they can get a phase one deal signed before Thanksgiving -- the probability of that is probably a little bit over 60 percent right now.
"This is a very important issue, and I think it could remove a lot of uncertainty."
In early trade, Hong Kong was up 0.2 percent and Tokyo went into the break 0.3 percent higher with Singapore, Seoul and Wellington also up.
But Shanghai dipped 0.4 percent and Sydney shed 0.1 percent, while Taipei and Manila were also in the red.
- Key figures around 0230 GMT -
Pound/dollar: DOWN at $1.2911 from $1.2989 at 2100 GMT on Friday
Euro/pound: UP at 86.41 pence from 86.20 pence
Euro/dollar: DOWN at $1.1156 from $1.1174
Dollar/yen: UP at 108.47 yen from 108.35 yen
Tokyo - Nikkei 225: UP 0.3 percent at 22,555.34 (break)
Hong Kong - Hang Seng: UP 0.2 percent at 26,764.86
Shanghai - Composite: DOWN 0.4 percent at 2,927.76
West Texas Intermediate: DOWN 17 cents at $53.61 per barrel
Brent North Sea crude: DOWN 26 cents at $59.16 per barrel
New York - Dow: DOWN 1.0 percent at 26,770.20 (close)
London - FTSE 100: DOWN 0.4 percent at 7,150.57 (close)