Sterling Strengthens Amid U.S. Recession Concerns

Sterling strengthened against the U.S. dollar as recession fears prompt traders to flee the greenback. Although the pound gained against the dollar, it continued to struggle against the euro. Market analysts remain cautious, predicting short-term gains might not last. Attention shifts towards Britain's upcoming GDP data.

The British pound strengthened against the U.S. dollar on Tuesday, supported by fears of a recession in the United States. Traders are moving away from the greenback, but the U.K. currency is also grappling with losses against a strengthening euro.

Sterling rose 0.4% to $1.2931, capitalizing on a 2.7% gain from last week as U.S. tariff-related slowdown fears boosted traders' caution. Experts, however, warn of the potential for only short-term buoyancy.

Focus remains on the U.K.'s GDP numbers due on Friday, while optimism regarding a German defense spending deal has bolstered the euro, narrowing the yield spreads of German and U.K. bonds to record levels.

(With inputs from agencies.)