Sterling's Resilience Amid Economic Forecasts and Tariff Woes

The pound rose slightly after hitting a two-week low, in light of tariff impacts and the upcoming UK spring statement. Finance minister Rachel Reeves is set to reveal spending cuts, impacting growth forecasts. The pound's movement reflects Bank of England's cautious stance on interest rates amid ongoing tariff uncertainties.

Sterling showed slight recovery on Tuesday following a dip to a two-week low, as investors continued evaluating the implications of global tariffs. Anticipation builds around Wednesday's UK spring statement, where finance minister Rachel Reeves is expected to introduce spending cuts during a period of lower-than-anticipated growth and heightened government borrowing costs.

The pound had achieved a four-month peak the previous week as the U.S. dollar weakened, impacted by concerns over President Donald Trump's tariff policies. However, caution persisted with sterling dropping again on Monday, reflecting uncertainties as investors awaited brighter indications regarding Trump's tariff announcements.

Currency strategist Francesco Pesole pointed out the risks the spring statement posed for sterling, particularly if negative reactions emerge from the UK bond market. The pound's outlook remains sensitive to government fiscal actions and global trade policies, amid signals the Bank of England remains cautious on rate cuts.

(With inputs from agencies.)