The pound briefly hit $1.40 against the US dollar on Tuesday for the first time since June 2016, before the greenback seized the upper hand and made a broad rally against its rivals.
Sterling started the day with gains, rising as high as $1.4003 in early Asian trade.
The push higher lacked momentum, however, and the $1.40 level appeared to show some resistance as the morning moved on - proving more of a selling point by the time European traders came on line.
Miles Eakers, chief market analyst at Centtrip remarked on the pound's 18% rally since October 2016. He said: "Sterling’s strong performance comes amid fresh optimism that a deal to leave the EU could be reached."
Best performing major
Hussein Sayed at FXTM remarked: " Although a lot of the currency’s strength is attributed to dollar’s weakness, the pound is the best performing major currency this year, and it’s up 1.35% against the euro year-to-date, which is a better proxy for Brexit negotiations."
He added that the $1.40 level was a significant milestone in the pound's recovery.
"The $1.40 level is not only a psychological level, but it has also been considered a key support level during the past three decades prior to the Brexit vote.
"I still believe there’s more upside potential if Brexit talks continue to move forward when they resume in March."
After hitting its 27-month peak, the pound retreated to stand 0.26% lower at $1.3948 versus the dollar and faded 0.14% to €1.1391 against the euro.