The British pound slid against the euro and dollar yesterday, the start of a pivotal week for Britain and the European Union to strike a Brexit deal.

European stock markets also retreated as weak Chinese data offset a partial trade deal between China and the US, analysts said.

Asian investors had earlier yesterday saluted the trade deal, sending regional equity markets rallying, though observers were sceptical about the overall significance of the agreement.

Official data, meanwhile, showed Chinese imports and exports fell more than forecast in September, as US tariffs and cooling demand at home and abroad hit trade in the world's second largest economy.

The figures weighed heavily on the oil market, with crude futures slumping around two per cent. They had surged Friday, fuelled by a blast on an Iranian tanker and news of the US-China deal.

“Although the United States and China made some progress late last week and President Trump suspended tariffs due to come in in mid-October, the damage from the existing trade restrictions is being felt,” noted Fiona Cincotta, senior market analyst at City Index trading group.

She added: “The pound has dropped like a stone overnight after Brexit negotiations didn't lead to any significant progress over the weekend.”