The pound began the week on the back foot against its main rivals, as investors looked ahead to a series of significant economic releases during the week, which could give an important indication over the state of the UK economy.

Having registered its fourth consecutive weekly gain against the euro on Friday (25 November), sterling traded 0.45% lower against the common currency by early afternoon on Monday, exchanging hands at €1.1707.

The pound was also lower against the dollar, shedding 0.61% against the greenback to $1.2392.

Updates on the health of the UK economy this week will come in the form of mortgage approvals data on Tuesday, followed by November's and construction PMI activity data on Thursday and Friday respectively, while European Central Bank President Mario Draghi will testify on economic and monetary affairs before the European Parliament later this afternoon (28 November).

Draghi's speech will be closely monitored as it comes only a few days before Italy goes to the polls to vote on a constitutional referendum. Analysts have warned that a win for the 'No' campaign could see Prime Minister Matteo Renzi stepping down, which could in turn generate more political instability in an already volatile environment.

"It is widely known that the Eurozone is entangled in a losing battle with faltering growth while political instability in Italy has left the Euro vulnerable to losses," said FXTM research analyst Lukman Otunuga.

"A resurgent dollar against the euro is making the EURUSD a sellers dream with the parity reality materialising in the medium-to-longer term."

Aside from gaining against the pound, the euro was broadly flat against its major rivals, fetching $1.0587 as the greenback's rally paused for breath. The US currency was 0.52% and 0.67% lower against the yen and the Canadian dollar respectively, exchanging hands at ¥112.67 and CAD$ 1.3429 and trading 0.20% lower against its Australian counterpart at AUD$ 1.3407.

Chris Beauchamp, chief market analyst at IG, said the recent dollar depreciation meant bad news for equities in Europe and Japan.

"After weeks of dollar strength, it looks like we are in for some profit-taking where the greenback is concerned, which spells trouble for stock markets in Europe and Japan, which have been lifted as their currencies suffer a drubbing thanks to the dollar," he explained.