LONDON: Sterling slid to a fresh three-week low versus the US dollar on Tuesday as investors remained cautious on risk assets amid growing tensions in Ukraine and bets the Federal Reserve will hike rates.

Sterling, which is considered a riskier currency, has been under pressure as investors were nervous about the potential for military conflict in Ukraine.

Russia said on Tuesday it was watching with great concern after the United States put 8,500 troops on alert to be ready to deploy to Europe in case of an escalation in the Ukraine crisis.

“The US dollar is a safe haven suggesting that cable is likely to slip on any further increase in tensions,” said Jane Foley, head of FX strategy at Rabobank London.

Additionally, markets are watching a Fed meeting ending on Wednesday that could signal the removal of its vast stimulus programme. The jitters sent the dollar higher against a basket of currencies.

Sterling was flat versus the greenback at $1.3483 at 1600 GMT, after touching its lowest level since Jan. 3 of $1.3436.

Versus a weakening euro, sterling rose 0.4% to 83.61 pence, after sliding to its lowest level this year on Monday against the single currency.

Rabobank’s Foley also said the rising cost of living may force investors to scale back some of their Bank of England interest rates rising bets for 2022.

Markets are pricing in BoE interest rate hike in February, after a surprise hike in December by 15 basis points, to 0.25%.