LONDON- The pound fell to its lowest in almost two weeks on Tuesday against both the dollar and the euro as investors sought safe haven currencies following a crash in oil prices.

U.S. oil futures turned negative for the first time ever on Monday, causing the dollar to rise to near two-week highs against a basket of  as investors shunned riskier assets.

The change in global risk appetite drove the pound more than better-than-expected unemployment data for March, which showed that unemployment benefit claims increased by 12,100 in March, far below the median forecast of 172,500 in a Reuters poll of economists.

The data was based on the situation on March 12, 11 days before the government declared the lockdown that has paralysed much of Britain's economy, limiting its impact on the economic outlook.

"UK labour market data was largely a non-event... Today it's all about dollar strength and low oil prices," said Kenneth Broux, FX strategist at Societe Generale.

Versus the dollar, the pound was down 0.93% at $1.2315, its lowest in 13 days. Versus the euro it was last down around half a percent, at 87.95 pence per euro.

As measures to limit the spread of the coronavirus, such as shutting down businesses, take their toll on the economy, Britain is facing what is expected to be its worst recession in 300 years.

In addition to the economic fallout from the lockdown, the pound is also being held down by Brexit, negotiations for which are due to take place via teleconferencing over the next three months.

"Inward investors are skeptical of any political or potential political disruption," said Jane Foley, FX strategist at Rabobank, who expects news of how the negotiations are progressing to have an impact on the pound.

"Given that the economy will be in a recession this year because of the crisis, given that a huge amount of workers have been furloughed, I think there's increased skepticism that the UK government will have the procedures in place in January next year to deal with a whole new system," she said.

"Brexit has just been overlaid on top of the bigger factor about dollar demand," she added.

Employers have put more than 1 million staff on temporary leave, finance minister Rishi Sunak said on Monday, reporting a flood of applications to a government programme subsidising furloughed workers' wages.

Government budget forecasters last week said unemployment could rise as high as 10% with an extra 2 million people losing their jobs if the lockdown was only slowly lifted over the next three months. 

PMI data due on Thursday will be more telling about the impact of the lockdown, Societe Generale's Broux said.

(Reporting by Elizabeth Howcroft; editing by John Stonestreet and Alexandra Hudson) ((elizabeth.howcroft@thomsonreuters.com))