Sterling sinks to two-month low

The pound fell to a two-month low against a broadly strong euro on Friday ahead of a new round of Brexit talks next week, but it recovered a little against a weaker dollar.
Brexit talks about a trade deal with the European Union have not gone well, with the clock ticking on a transition period that runs out at the end of the year. The European Union and Britain will have to engage in accelerated Brexit talks over the summer if they are to reach a deal, an adviser to the EU's chief trade negotiator Michel Barnier said.
Separately, Irish Prime Minister Leo Varadkar said very little progress had been made in the Brexit negotiations. Without progress next week a no-deal scenario could be priced in and weigh on sterling, Swissquote senior analyst Ipek Ozkardeskaya said in a note to clients.
"The UK will start preparing for a no-deal divorce if we do not see material progress in talks next week," Ozkardeskaya said. Bank of England Chief Economist Andy Haldane said earlier this week the central bank was not close to implementing negative interest rates, which money markets are already pricing in.
A coronavirus-induced recession and growing debt are also holding down the pound. Against a broadly strong euro, sterling lost 0.2% to 90.07 pence at 1513 GMT, its weakest since March 27.
This month sterling has lost almost 4% against the euro, which has gained support from the European Commission stimulus plan announced this week. The euro also rose as data showed inflation in the bloc continued to slow but underlying price growth held steady.
Against a weakening dollar, the pound gained 0.1% to $1.2327 at 1513 GMT, with traders fearful that tensions between US President Donald Trump and China could escalate.