The pound rallied against the dollar on Thursday, driven by increasing investor pessimism regarding the U.S.-China trade war. The lack of progress in de-escalating trade tensions between the world's two largest economies boosted the pound's value.
The pound was trading at $1.331, near its highest level in seven months. However, sterling showed less strength against the euro, with the common European currency up 0.2% at 85.54 pence.
Data indicates a slowing British economy, with weakening business activity and strained public finances. The British government borrowed almost 15 billion pounds more than forecasted, adding pressure on public finances.
Commerzbank strategist Michael Pfister noted the UK's growth has relied heavily on the public sector. He added that government fiscal constraints, combined with U.S. tariffs, paint a less promising growth outlook.