The US dollar continued to strengthen after the market digested the latest FOMC meeting results when the Federal Reserve (Fed) maintained the interest rate at 4.50%.
Fed Chairman Jerome Powell, who commented on inflation and the US labor market remaining stable, has eased concerns about the world's largest economy.
This follows a report published last week on the first quarter of 2025 economic growth showing a contraction driven by tariff war pressures.
In addition, Powell stated that the central bank's decision will not be influenced by President Donald Trump's insistence on lowering interest rates.
Market sentiment is now restored with the development of trade negotiations that are currently in focus.
The US has agreed to reduce import taxes from the UK involving vehicles as well as steel and aluminum as part of a new agreement for the two countries.
The announcement provided relief to the UK's vital industry, but the 10% basic tariff will remain in place.
The Pound, however, failed to perform well, weighed down by the reaction to the central bank's easing monetary policy.
The Bank of England (BOE) met expectations by cutting interest rates by 25 basis points from 4.50% previously to 4.25%.
At the end of this week, a follow-up statement by BOE Governor Andrew Bailey will be awaited, while the Canadian jobs report will be the focus of the New York session.
The market remains cautious about the development of US trade talks with China, which will be held this Saturday to discuss tariffs.
