Pound Sterling recovers as US Dollar retreats amid trade optimism

Pound Sterling Recovers Against US Dollar as Greenback Pulls Back

The British Pound recovered against the US Dollar during Wednesday’s European trading session, rebounding from earlier losses to trade near 1.3460. The recovery came as the US Dollar lost ground following a brief rally, despite improving market sentiment driven by trade developments.

Investors showed renewed optimism amid signs of improved US-China trade relations and a boost in US consumer confidence. While these factors initially supported the Greenback, it failed to maintain its gains. The US Dollar Index (DXY), which measures the currency’s strength against a basket of six major peers, slipped to 99.50 after reaching a high of 99.85 on Tuesday.

Market sentiment was also influenced by comments from former President Donald Trump, who posted on Truth.Social that the European Union had reached out to arrange meeting dates for a potential trade deal with the United States. This followed Trump’s recent threat to impose a 50% tariff on EU imports, which initially rattled markets but now appears to have prompted faster negotiations.

Despite the shifts in global trade dynamics, the Bank of England is not expected to cut interest rates in its June meeting, lending further support to the Pound.

As risk appetite improves and the US Dollar pares back recent gains, the GBP/USD pair continues to find footing just below the 1.3500 level.