Pound Sterling trades higher against USD as Fed dovish bets swell
The Pound Sterling (GBP) gives up a majority of intraday gains against the US Dollar (USD) in Tuesday’s European session. Still, the GBP/USD pair is up 0.25% to near 1.2850. The Cable struggles to extend recovery after an intense sell-off in the last two trading days as the US Dollar strives to gain ground. The US Dollar Index (DXY), which tracks the Greenback’s value against six major currencies, bounces back from the intraday low of 102.78 but is still 0.2% down to near 103.25, at the time of writing.
However, the outlook of the Greenback remains uncertain as traders have become increasingly confident that the Federal Reserve (Fed) could reduce interest rates earlier this year to offset fears of potential United States (US) economic recession. According to the CME FedWatch tool, traders are almost certain that the central bank will resume its monetary policy easing cycle in the June policy meeting, which it paused in January.
The imposition of reciprocal tariffs by US President Donald Trump and fears of countermeasures by China and the Eurozone have stemmed the risks of a recession in the US. Investment banking firm Goldman Sachs has raised the probability of the US entering a recession to 45% from 35%, as anticipated last week.
Source: FXstreet
