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The pound fell to its lowest level since last Wednesday overnight, driven by a stronger dollar as China-U.S. relations worsened.

The U.S. government made a renewed effort to blame China for the coronavirus outbreak. Secretary of State Mike Pompeo said on Sunday there was evidence the virus, which has killed nearly a quarter of a million people globally, was made in a Chinese laboratory.

The heightened tensions between the U.S. and China diminished market optimism about an economic restart as countries started to ease their lockdown restrictions. As investors flocked to the safe-haven dollar, cable fell.

Against the dollar, the pound was last at $1.2452, having fallen 0.4% since New York’s close on Friday.

Britain’s defence minister said he agreed that China has questions to answer over the information it shared about the coronavirus outbreak, but that a post-mortem about its role should not come until the virus is under control.

A lack of progress in Brexit negotiations and a fear that Britain is falling behind other European countries in terms of easing lockdown restrictions to allow for an economic recovery, are both weighing on the pound’s long-term prospects, analysts say.

On Sunday this week, Johnson is due to review the lockdown. He must find a way to get the world’s fifth largest economy back to work without triggering a deadly second wave of COVID-19 infections.

The Bank of England also meets on Thursday when it will attempt to quantify the economic impact of the coronavirus crisis.

Away from Thursday’s BoE rate meeting, the focus this week will be on the UK governments “phase two” announcements about softening the lock-down.

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