What caused the pound to recover some losses against the dollar?

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Sterling Rebounded Against the Dollar Due to Easing Demand and Improved Market Sentiment

Sterling saw a recovery against the US dollar as demand for the American currency diminished. This shift was primarily driven by an improvement in global market risk sentiment, which allowed the British pound to regain some of the 1.5 per cent it had lost earlier in the month.
Easing Lockdowns and Reduced Geopolitical Tensions Boosted Risk Appetite

Market risk appetite improved notably as various governments began to ease their lockdown measures. Furthermore, statements from US officials suggesting that punitive actions against China over the coronavirus outbreak were not being pursued helped to alleviate geopolitical concerns. This contradicted earlier threats of tariffs, contributing to a more positive outlook.
Sterling's Performance Against the Dollar and Euro

By 1550 GMT, sterling had gained 0.1 per cent against the dollar, reaching US$1.2449. The pound also saw gains against the euro, at one point rising as much as 0.7 per cent. This occurred after the euro weakened following a German court ruling concerning the Bundesbank's bond-buying activities under the European Central Bank's stimulus scheme. Sterling was last trading 0.6 per cent higher against the euro at 87.13 pence.
Broader Economic Context and Future Outlook for Sterling

Despite the recent rebound, sterling remains down 1.2 per cent against the dollar for the month, following a 1.4 per cent gain in April. Historically, May has tended to be a weaker month for the pound. Analysts suggest that while sterling has steadied, risks remain to the downside, with limited positive catalysts expected for May. Concerns about a potential second wave of coronavirus cases or a more severe economic slowdown in the UK could further cap sterling's gains, with any significant downward movement likely driven by safe-haven flows into the US dollar during broader market downturns. Economic data from the UK continues to reflect a challenging environment, with new-car sales in April plummeting by approximately 97 per cent and small manufacturers anticipating the largest decline in output in over three decades.

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What caused the pound to recover some losses against the dollar?

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