The pound kicked off the week lacking direction, climbing against the dollar but declining against the euro as investors looked ahead to a week of crucial economic reports.

Sterling was 0.30% higher against the greenback, trading at $1.2923, but slid 0.18% against the euro, fetching € 1.1767.

Lukman Otunuga, research analysts at FXTM, warned sterling's recent gains against the greenback could be short-lived.

"Although short term bulls may exploit the upside momentum to elevate the pound higher towards $1.3000, uncertainty over Brexit should limit gains in the medium to longer-term," he said.

"Sterling bears still have a shot to attack, especially when considering that the threat of Brexit negatively impacting the UK economy has encouraged the Bank of England to maintain a dovish stance."

On Tuesday (16 May) official data is expected to show that inflation grew 2.6% year-on-year April, higher than the 2.3% rate recorded in March and above the Bank of England's 2% target for the third consecutive month.

Two days later, investors will analyse the latest retail sales figures, which are expected to show no change from March, when sales grew 2.6% on annual basis.

Sandwiched in between the two, the markets will also receive the latest snapshot of the labour market.

"Due to the level of expectation in the market for a big CPI number, the bigger risk is a disappointing number that could weigh on the pound," said Kathleen Brooks, research director at City Index.

" Key support levels to watch include $1.2900 for the pound/dollar rate and 0.8500p for the euro/pound rate. A large increase in inflation data may not by itself be enough to propel sterling much above $1.30 versus the dollar. Instead we may need to wait for the wage data included in the UK jobs report to see a positive boost for the pound."

Elsewhere, the dollar was largely on the back foot against most of its major rivals, with the exception of the yen. The greenback slid 0.43% and 0.47% against the euro and the Swiss franc respectively, trading at €0.9107 and CHF0.9962. The dollar was also lower against its Australian and Canadian counterparts, losing 0.79% against the former and 0.74% against the latter to trade at AUD$1.3437 and CAD$1.3608 respectively.