Sterling Bounces Back Amid Global Trade Optimism

Sterling rebounded against the dollar after a de-escalation in U.S.-China tariffs boosted global risk appetite. Despite concerns over British inflation and interest rate policies, the UK pound showed resilience. Key economic events, such as the UK-EU summit and inflation data release, are expected to influence sterling's performance.

Sterling recovered some of its losses against the dollar on Tuesday, spurred by the easing of tariffs between the United States and China. This de-escalation, following weekend negotiations, has enhanced global appetite for risk.

The British currency appreciated by 0.26% to $1.32115, after dipping 1% to a four-week low of $1.318 on Monday. It remained steady against the euro and the yen, with the euro declining 0.14% to 84.06 pence -- its lowest in over five weeks.

Despite the optimistic trading environment, Bank of England's Chief Economist Huw Pill voiced concerns about potential inflationary pressures in Britain. He cautioned on interest rates staying higher than anticipated, highlighting key upcoming events, such as the UK-EU summit, which could impact sterling's trajectory.

(With inputs from agencies.)