The Pound Sterling (GBP) recovers early losses and turns slightly positive to near 1.3340 against the US Dollar (USD) during European trading hours on Thursday. The GBP/USD pair attracts bids as the US Dollar (USD) faces pressure, while extending its two-day recovery, a move that is driven by hopes that fears of global disruption due to the imposition of additional tariffs by United States (US) President Donald Trump have peaked.

The US Dollar Index (DXY), which tracks the Greenback's value against six major currencies, struggles to break above the fortnightly high around 100.00.

The USD rebounded after the White House signaled that it could announce bilateral trade deals with a number of trading partners in weeks. "Initial trade deals are to be announced in weeks, not months," US Trade Representative Jamieson Greer said at Fox News, Reuters reported.

However, he denied any trade discussion with China, which is still a concern for market participants, given the reliance of US industries on imports from the Asian giant.

The release of US Q1 Gross Domestic Product (GDP) data on Wednesday has also supported the US Dollar. The data showed that the US economy shrank in the first quarter of the year by an annualized rate of 0.3%, mainly due to a substantial increase in imports. US importers frontloaded inputs from their foreign suppliers to escape the burden of higher tariffs imposed by US President Trump on April 2.

In Thursday's session, investors will focus on the final S&P Global and ISM Manufacturing Purchasing Managers' Index (PMI) data for April. Investors will pay close attention to the ISM Manufacturing Prices Paid to know whether the impact of Trump's protectionist policies has started feeding into input costs.

Last week, the preliminary S&P Global PMI report already said that tariffs are causing companies to "hike their selling prices at a pace not seen for over a year".

The agency warned that these higher prices will "inevitably feed through to higher consumer inflation, potentially limiting the scope for the Federal Reserve (Fed) to reduce interest rates at a time when a slowing economy looks in need of a boost".

Source: FXStreet