The British pound edged higher against the dollar Tuesday as declining oil prices eased inflation concerns for the import-dependent UK economy.
Sterling rose 0.1% to $1.3454 against the dollar, while slipping slightly against the euro to 86.52 pence.
Analysts say the currency’s modest rebound reflects investor repositioning after recent volatility tied to geopolitical risks.
Lloyds strategist Nick Kennedy noted that markets often recover after a temporary shakeout, even when underlying UK economic fundamentals remain weak.
Despite the bounce, sterling has fallen about 0.3% this month against the dollar as investors remain cautious.
Global markets continue to monitor the U.S., Israel, and Iran conflict, searching for signals of de-escalation that could stabilize energy markets.
Analysts warn uncertainty persists, particularly after Iran signaled potential disruptions to oil shipments through the Strait of Hormuz.
Meanwhile, expectations are rising that the Bank of England could cut interest rates in the second quarter, as domestic economic and political risks continue to weigh on sentiment.
