Sterling strengthened on Monday as investors digested upbeat UK economic data and the government's plans to boost defence spending, while broader concerns over US-China trade tensions weighed on the dollar. The pound rose 0.53 per cent to $1.3531 by 10:56 GMT, while holding steady at 84.37 pence against the euro. Markets were buoyed by data showing a milder-than-expected decline in UK manufacturing activity and a 3.5 per cent annual rise in house prices in May, according to Nationwide. However, investor focus also turned to a defence review due Monday, amid concerns that higher military spending under Prime Minister Keir Starmer could stretch fiscal limits. "Fiscal constraints will limit how much the UK can invest into its defence arsenal," said Deutsche Bank senior economist Sanjay Raja. Yields on 10-year UK gilts held around 4.67 per cent, as markets continued to price in limited scope for interest rate cuts from the Bank of England. Investors are awaiting comments from BoE policymaker Catherine Mann for further policy signals. Attribution: Reuters Subediting: Y.Yasser
