The FTSE 100 has started to recover some of the day's losses as it heads for the close.
Down as much as 0.8% earlier, the index is now little changed at 7,025.90, down 12.11 points or 0.1%.
Sterling, which had its worse day since 2016 during Thursday's political turmoil, is rebounding.
It is up 0.6% against the dollar at $1.2851.
Enjoy it while it lasts
The pound is up...for now
Stability in the pound... could be short-lived, with clamours for a vote of no confidence from Conservative Brexiteers meaning the political upheaval will continue as we end the week."
Sterling enjoys a pause
"Taking good news where it could get it, the pound managed
a meek rebound as investors processed the latest non-resignations," says Spreadex financial analyst Connor Campbell.
Sterling is up 0.27% against the dollar at $1.2809 and 0.31% higher against the euro at €1.1313.
"With its fortunes tethered to
Theresa May, however, any growth comes with a cavalcade of caveats," says Mr Campbell.
for the FTSE, it erased its initial gains as the morning went on, a downturn
from its banking and housebuilding stocks – which were already seriously hurt
on Thursday – leading the index 0.4% lower and back towards 7,000."
BreakingMichael Gove confirms he will stay
Environment Secretary Michael Gove has confirmed that he will stay in Prime Minister Theresa May's Cabinet.
So far, however, the pound has barely budged against the dollar following the announcement. It is trading at $1.2809.
The pound has extended gains on both the dollar and the euro.
Sterling is up 0.37% against the dollar at $1.2822 and ahead 0.13% against the single currency at €1.1293.
Despite Friday's rise, however, analysts still expect the pound to remain under pressure.
Ulrich Leuchtmannan, an FX strategist
at Commerzbank, says: "As long as 'no deal' remains as likely as it is, there is a
risk of a sterling depreciation spiral that is
"Sterling volatility has woken up from its 100-year slumber
and is likely to remain reactive."
Interest rates - higher or lower?
BBC Radio 4
The political chaos of Brexit is likely to have an impact on how the Bank of England sets interest rates over the next year.
"If the deal gets through parliament, if we have a transition period, we think the Bank of England will be raising interest rates but not till later next year," Sarah Hewin, Europe economist at Standard Chartered tells the Today programme.
"If we crash out of the EU, then the expectations should be that with a weak economy, the Bank of England would not increase interest rates - it might even cut rates."
However, a no-deal Brexit could also lead to an interest rate rise.
"The Bank of England's Monetary Policy Committee has said, 'don't expect it to be one way'. Supply is going to be severely interrupted if we crash out of the EU with no deal," she says.
"That would raise inflation, we'd see higher tariffs which would also cause a fall in the value of the pound, and so the Bank of England might decide that we need to raise interest rates."
Not all about Brexit
BBC Radio 4
Yesterday saw great volatility with the pound, which fell more than 1.8% against the dollar on a wave of ministerial resignations over Theresa May's draft EU withdrawal plan.
James Bevan, chief investment officer at CCLA Investment Management, says that there are a number of reasons that will continue to affect the sterling.
"There are some interesting fundamentals behind this - we have the UK economy which is likely to have slower growth than the EU and the US next year, to have interest rate differentials that are moving against the pound because of the expectation that both the Federal Reserve and the European Central Bank will raise rates faster than the Bank of England next year," he tells the Today programme.
"And of course, Britian now has a deficit in the corporate, household and government sector. That is typically not supportive of the currency."
Not all doom and gloom
BBC Radio 5 live
With such uncertainty over Brexit - and its effect on the pound - James Bevan, chief investment officer at CCLA investment management, says: "Bearing in mind the pound was at $1.2660 earlier this year, we're just oscillating in a relatively band value.
"We've not seen a breakdown in the value of the pound against other currencies and on that basis I still think there is great value overseas in some fantastically well-run businesses."