Dollar Rally Shows Signs of Exhaustion, Pound and Euro Gain

The British pound (GBP) saw a modest gain on Thursday, rising to $1.3248 as the dollar's rally showed signs of exhaustion.

The euro (EUR) also edged up to $1.1394, while the dollar index (DXY) held near its highest level since 2007 at 101.0.

ING FX strategist Francesco Pesole warned that the dollar's recent surge has overshot its fundamentals and may be due for a correction in the coming weeks, potentially returning to the 100-100.5 area if further data surprises fail to materialize.

Pesole noted that any upside surprise in upcoming US data releases could prompt markets to fully price in an October Federal Reserve hike, which would keep him cautious about declaring a near-term dollar ceiling.