The Pound Sterling (GBP) bounces back to near 1.2800 against the US Dollar (USD) in Tuesday's European session from over a month's low of 1.2708 posted on Monday.
The GBP/USD pair recovers as the US Dollar resumes its downside move after a short-lived recovery in the last two trading days. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, tumbles to near 102.90.
The Greenback remains on the backfoot 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
