The pound rose Friday but was struggling to claw back its latest losses after the EU gave Britain a Brexit deadline extension, while equity markets mostly rose on a positive lead from Wall Street.
At a summit in Brussels, Prime Minister Theresa May was given until April 12 to push her divorce agreement through a fractious parliament next week. If she manages to get it passed, the exit date will be pushed back until May 22.
However, a third defeat by MPs would mean Britain crashes out on April 12, unless London agrees to take part in European elections, a move the prime minister previously has ruled out.
The announcement puts pressure on May to get her deal through Westminster, with French President Emmanuel Macron warning: "In the case of a negative British vote then we'd be heading to a no-deal."
The sterling has come under pressure owing to the uncertainty in the past few days, falling to as low as $1.3004 Thursday, though it has recovered slightly and is still maintaining its position.
However, OANDA senior market analyst Jeffrey Halley remained wary.
"The investor community continues to price the pound as if a no-deal Brexit is not possible, looking for excuses to buy rather than sell," he said in a note.
"A close look at the text of the EU announcement suggests this is not a guaranteed outcome."
The Bank of England on Thursday expressed concern that further "uncertainties" over a "cliff-edge" no-deal Brexit "could have a significant effect on spending" by businesses.
Equities were mostly up but dealers were treading warily as they weighed an indication from the Federal Reserve that borrowing costs will not rise this year with concerns about the slowing economy and stuttering China-US trade talks.
Tokyo ended 0.1 percent higher and Shanghai gained 0.1 percent while Sydney added 0.5 percent, Seoul gained 0.1 percent and Wellington jumped one percent.
Singapore, Taipei, Manila and Bangkok were also well up.
But Hong Kong fell 0.3 percent in the afternoon while Mumbai and Jakarta were lower.
The next possible market-moving catalyst could be next week as top US officials head to Beijing on March 28-29 for a new round of trade talks, followed by a trip to Washington by China's top negotiator in April.
While there is optimism a deal will eventually be struck, Donald Trump caused ripples when he said Wednesday that US tariffs on Chinese imports could remain in place for a "substantial period", dampening hopes that an agreement would see them lifted soon.
- Key figures around 0700 GMT -
Tokyo - Nikkei 225: UP 0.1 percent at 21,627.34 (close)
Hong Kong - Hang Seng: DOWN 0.3 percent at 28,971.30
Shanghai - Composite: UP 0.1 percent at 3,104.15 (close)
Pound/dollar: UP at $1.3152 from $1.3102 at 2040 GMT
Euro/pound: DOWN at 86.52 pence from 86.77 pence
Euro/dollar: UP at $1.1378 from $1.1369
Dollar/yen: DOWN at 110.70 yen from 110.80 yen
Oil - West Texas Intermediate: DOWN six cents at $59.92
Oil - Brent Crude: DOWN two cents at $67.84 per barrel
New York - DOW: UP 0.8 percent at 25,962.51 (close)
London - FTSE 100: UP 0.9 percent at 7,355.31 (close)