The Pound Sterling (GBP) recovers some of its initial losses against the US Dollar (USD) in Wednesday's European session, still trading lower in the day around 1.3300.

The GBP/USD pair pares some intraday losses as the US Dollar (USD) retraces after a sharp upside move on Wednesday. The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, corrects to near 99.20 from the earlier high of 99.88.

Investors brace for more recovery in the US Dollar on optimism over de-escalation in the United States (US)-China trade war and diminishing fears of President Donald Trump sacking Federal Reserve (Fed) Chair Jerome Powell for not lowering interest rates.

While addressing reporters at the Oval Office on Tuesday, Donald Trump highlighted a "sharp reduction in trade deficits" and "rising revenue" generated from the imposition of tariffs on foreign cars, aluminium, and steel.

Trump expressed confidence that his administration is negotiating deals with several countries, which will be effective soon. On the current situation with China, Trump commented that "discussions with Beijing are going well". The President added that he thinks "they will reach a deal".

Trump further added that tariffs on China would not be as high as "145%, but they wouldn't be zero".

Moreover, President Trump pushed back fears of removing Jerome Powell despite criticizing him for not supporting monetary policy expansion. "The press runs away with things. No, I have no intention of firing him. I would like to see him be a little more active in terms of his idea to lower interest rates."

In the last few trading sessions, investors were punishing the US Dollar and US assets due to Trump's assault on the Fed's independence and ever-changing headlines on trade policies. Market participants started doubting the safe-haven status of the US Dollar.

In North American trading hours, investors will focus on the flash US S&P Global Purchasing Managers' Index (PMI) data for April.

Source: FXStreet