The exchange rate has climbed back to €1.121, after plunging to €1.109 yesterday.
Sterling nosedived after comments from the EU’s chief Brexit negotiator.
Michel Barnier alarmed markets when he warned there had been “no great step forward” in Britain’s exit from the bloc.
He described the lack of progress as “disturbing”, but added that progress is in grasp within the next two months.
The UK’s Brexit secretary David Davis also spoke yesterday, said there had been progress over the rights of EU citizens remaining in Britain.
But his upbeat comments did little to boost the exchange rate.
Sterling began to recover later in the day amid speculation the EU could give a transitional deal to Britain after the Brexit date.
TorFX currency analyst Laura Parsons said: “While the GBP/EUR exchange rate initially slumped on Thursday in response to the news that the latest round of Brexit negotiations had ended in deadlock, the pound was able to recoup some of its losses later in the day.
Mariano Rajoy told parliament Spain was facing the most serious threat to its democracy of 40 years.
The exchange rate remains volatile to political tensions in both the UK and Eurozone.
Ms Parsons said: “With both UK and Eurozone data in fairly short supply today, further Brexit related developments are likely to be the cause of any additional GBP/EUR volatility before the weekend.
“That being said, news from the US could cause euro fluctuations if it’s viewed as having an impact on Fed rate hike expectations.”