The British pound has rebounded sharply against the US dollar; caution is warranted against a potential pullback.

The pound sterling traded in a choppy, consolidating range against the U.S. dollar during Tuesday’s Asian session, currently hovering around 1.3330, extending the previous day’s rebound from near a three-week low of 1.3300. A softening U.S. dollar, driven by easing tensions in the Middle East, has provided some support for the pound, though overall market sentiment remains cautious.

On Monday, the Iranian military announced it had ended its attacks against Israel, while warning that any further Israeli military action in Lebanon would be met with retaliation. Israeli Prime Minister Benjamin Netanyahu confirmed a pause in hostilities but stated that Israel would respond forcefully to any future attacks. With geopolitical tensions easing temporarily, demand for the U.S. dollar as a safe-haven asset has weakened, supporting a short-term rebound in the pound against the dollar.