Dollar Slips as Traders Trim Fed Rate Hike Bets; Sterling Falls After UK GDP Data

The US dollar weakened against major currencies on Thursday as traders scaled back expectations for further Federal Reserve rate hikes. The dollar index, which measures the greenback against a basket of six major currencies, fell by 0.3% to 104.20 at 10:00 a.m. ET.

This decline followed softer-than-expected US economic data and dovish comments from Federal Reserve officials, leading markets to reduce the probability of another rate increase at the next policy meeting. According to CME Group's FedWatch tool, 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 by 0.4% against the dollar to $1.2730 after data from the Office for National Statistics showed the UK economy contracted by 0.1% in the second quarter, missing expectations of flat growth. The GDP figure raised concerns about the resilience of the UK economy.