Sterling struggles after worst week since early June

Sterling edged up against a broadly weaker dollar on Monday, but lost more ground against the euro as doubts around U.K. economic growth and Brexit talks continued to weigh on the currency.

Britain released another pair of position papers for the divorce talks with the European Union, part of efforts by ministers to head off suggestions that negotiations are going slowly and may be delayed later this year.

Doubts over the government's handling of the Brexit talks and a collapse this month in expectations for a rise in Bank of England interest rates over the next year have pushed the pound back below $1.30 and 90 pence per euro.

It dipped 0.2 percent to a 10-month low of 91.51 pence per euro on Monday while gaining around 0.3 percent against the dollar to $1.2909.

Both of those moves were largely the result of broader shifts around the dollar, analysts and traders said.

"I wouldn't attribute the price action today to sterling factors," said BNP Paribas strategist Sam Lynton-Brown. "We have seen some movement in the dollar pairs this afternoon, a bit less so on sterling than some of the others."

Analysts remain extremely reticent to call the pound higher after the burst of selling in the past fortnight.

JP Morgan strategists on Friday cut their targets for sterling for the end of this year and 2018, citing a worsening outlook for economic growth.

"We are downgrading the GBP forecast to reflect less favorable cyclicals - the weakest growth in G10, the reduced probability of a near-term rate hike," they said in a note distributed publicly on Monday.

They argued that while the government seemed to have agreed on seeking a transitional deal that would smooth departure from the EU, there was not yet enough clarity on how the final trading relationship would pan out to buy the pound.

A number of analysts stress that London has largely been talking to itself for the past month. In July, the EU's top Brexit negotiator, Michel Barnier, said talks on future relations had become less likely to start in October because of a lack of progress on several non-trade issues.

The release of a swathe of papers this week underlines Britain's desire to counter criticism that its lack of clear positions on many issues is straining an already tight timetable.

"The evidence of the past two weeks reinforces the view that political factors (particularly those that may, even very indirectly, impact the outlook for growth) are now a focus for investors," said Simon Derrick, chief markets strategist with Bank of New York Mellon in London.

"This is useful to know, particularly given how fragile markets have often proved in Autumn."