Sterling edged up on Tuesday as data revealed the UK's manufacturing sector grew in March and mortgage approvals increased in February.

At the time of writing the Pound gained 0.14% to $1.2566 after declining 0.58% on Monday as the Dollar increased following robust US economic data.

The Euro fell 0.18% against Sterling at 85.47 pence.

Data published on Tuesday showed UK manufacturers registered their first overall growth activity in 20 months in March, Reuters reports, as a result of a recovery in domestic demand.

Furthermore, additional figures revealed Britain's banks approved the most mortgages since September 2022, a period marked by decreased lending following turmoil within the bond market attributed to Liz Truss' tenure as Prime Minister

"Consumer caution (is) fading in response to lower interest rates. We think households will be willing to spend more this year," said chief UK economist at Pantheon Macroeconomics, Rob Wood, noting a decline in mortgage rates and wages growing faster than inflation.

Data unveiled by mortgage lender Nationwide showed UK house prices increased in March at their fastest annual pace since December 2022. That said, they declined slightly between February and March this year, the Reuters report adds.

Since early March, the Pound has fallen, influenced by the strengthening of the greenback owing to positive US economic data and investors' perception of a more cautious stance from the Bank of England regarding inflation and potential interest rate reductions.

The UK economy tipped into a mild recession at the end of last year, but economists now see indications of modest growth.

Moreover, investors forecast around a 60% chance the Bank of England will slash rates in June, up from 15% at the beginning of March, as per derivative market pricing.

Additionally, the Dollar index, measuring the currency against six rivals, reached a four a half-month high on Tuesday of 105.1. At the time of writing, it fell slightly to 104.96.