Sterling edged higher Tuesday but remained near early-March levels against the euro, hovering close to a four-month low versus the U.S. dollar.
The pound traded up 0.30% at $1.3278, recovering slightly after touching $1.316 last week, its weakest level since late November.
Against the euro, sterling gained modestly to 87.14 pence, still below pre-March levels, reflecting ongoing currency pressure in European markets.
Investor sentiment remains cautious, with concerns centered on Britain’s fragile public finances and exposure to external economic shocks, particularly in energy markets.
Analysts note the UK’s energy dependency compares favorably with the EU, while expanding renewable output may provide a partial economic buffer.
Bond markets showed signs of stabilization after March volatility, as gilt yields eased following earlier spikes driven by inflation and rising energy costs.
The Bank of England signaled caution, warning markets may be overestimating rate hikes, reinforcing expectations of a measured monetary policy path.
Rising business costs and pricing pressures persist, with firms expecting faster price increases ahead, adding complexity to the UK’s inflation outlook.
