Dollar Loses Ground on Reduced Rate Hike Bets, Sterling Slumps After UK GDP Miss

The US dollar weakened against major currencies on Thursday as traders trimmed their expectations for Federal Reserve rate hikes, while the British pound fell after weaker-than-expected UK GDP data.

The dollar index dropped 0.3% to 104.20 at 10:00 a.m. ET, following softer economic data and dovish comments from Fed officials that reduced the probability of another rate increase at the next policy meeting.

CME Group's FedWatch tool shows traders now price in a 30% chance of a 25-basis-point hike in September, down from 45% a week ago.

The British pound fell 0.4% against the dollar to $1.2730 after the UK economy contracted by 0.1% in the second quarter, missing expectations of flat growth.