Pound to Euro exchange rate: Sterling plunges as Geoffrey Cox delivers Brexit blow to Theresa May

The pound has climbed to a two-month high. (Picture: Getty Images)

The British pound has plummeted after the Attorney General's legal advice on Theresa May's Brexit deal delivered a major blow to the PM.

In his legal advice published on Tuesday, Geoffrey Cox admitted Britain could still be locked forever into EU rules through the backstop.

Sterling had earlier surged, as Mrs May claimed to have won "legally binding" assurances from the bloc.

But by 11.30am, the pound had dropped 1.43 per cent against the Euro, while against the dollar it had fallen 0.8 per cent.

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It dropped in value from €1.175 to €1.155, and from almost $1.33 to around $1.30.

Earlier Sterling rose as speculation swirled that Mrs May could secure a Brexit deal before the UK’s scheduled March 29 departure from the bloc.

It extended gains as Mrs May said she had won Brexit assurances from the EU in a last ditch attempt to sway rebellious MPs who have threatened to vote down her deal in a vote on Tuesday.

At one stage on Monday the pound rose strongly to as high as $1.3290 having been as low as $1.2945 at one stage on Monday.

Theresa May and Jean-Claude Juncker look at each other during a news conference in Strasbourg (REUTERS)

At a joint news conference with European Commission head Jean-Claude Juncker late on Monday, May announced three documents aimed at addressing the most contentious part of the exit deal she agreed in November - the Irish backstop.

"Seeing them together in the same screen, is a positive - that there is some hand holding there and working together to move forward," said Bart Wakabayashi, Tokyo branch manager at State Street Bank.

The Irish backstop is an insurance policy aimed at avoiding controls on the sensitive border between the British province of Northern Ireland and EU member Ireland.

"If they can break (the backstop) down to a level where there can be some negotiation or at least compromise on both sides, there definitely does seem (to be) light at the end of the tunnel," added Mr Wakabayashi.

Theresa May urges MPs to vote for Brexit deal after securing

If Mrs May loses the vote on Tuesday, she has said MPs will get a vote on Wednesday on whether to leave without a deal and, if they reject that, then a vote on whether to ask for a limited delay to Brexit.

Most other currencies stayed within familiar trading ranges before US February inflation figures expected later on Tuesday.