Sterling rebounded against the dollar on Tuesday as demand eased for the US currency on the back of improving risk sentiment in global markets, allowing the pound to recover some of its 1.5% loss this month.

Risk appetite improved in markets as governments eased lockdowns and US officials said the United States was not looking to take punitive measures against China over the coronavirus outbreak, contradicting President Donald Trump's threat to impose tariffs on China.

By 1550 GMT, sterling was up 0.1% against the dollar at $1.2449.

Against the euro, the pound gained as much as 0.7% at one point after the single currency weakened after a German court ruled that Germany's Bundesbank must stop buying bonds under the European Central Bank's stimulus scheme if the ECB cannot justify the purchases.

The pound last traded 0.6% higher against the euro at 87.13 pence.

Sterling is still down 1.2% against the dollar this month, after posting a 1.4% gain in April. April has historically tended to benefit the pound due to seasonal factors such as the start of a new UK tax year and corporate dividend repatriation flows. May, on the other hand, tends to be a month in which it has historically posted declines. "Sterling has steadied after a sharp adjustment lower at the start of the month," said Viraj Patel, FX and global macro strategist at Arkera.