The pound fell against the dollar and euro overnight before steadying, with the dollar lifted by a bleak economic outlook from the Federal Reserve, and Brexit and the risk of negative rates continuing to weigh on sterling.
The dollar bounced against riskier currencies after the U.S. Fed’s economic outlook spooked investors.
Sterling had risen against the dollar for 10 successive days from May 28, behaving as a risk currency and strengthening when market optimism caused the safe-haven dollar to fall.
Britain has left the EU but the main terms of its membership remain in place during a transition period until the end of 2020, by when both sides hope to negotiate a new trade deal.
Britain has until the end of the month to request an extension to the transition period. A fourth round of Brexit negotiations ended with little progress.
Britain is seeking a trading relationship with the European Union that is too close to that of an EU member, EU Brexit negotiator Michel Barnier said on Wednesday, urging London to adjust its demands.
There was an unprecedented range of views in the latest poll of more than two dozen economists, with the median forecast for an 18.4% month-on-month plunge in the UK’s gross domestic product in April.
A gauge of British house prices hit a 10-year low in May but there are signs that confidence is returning to the market after the government lifted its coronavirus lockdown for buyers and sellers in England.