Dollar wobbles as Fed soothes market nerves with rate cut projection

The dollar weakened on Thursday after the Federal Reserve signaled that interest rate cuts are likely later this year, despite ongoing uncertainty surrounding U.S. tariffs. Meanwhile, the pound reached a four-month high ahead of the Bank of England's upcoming policy decision.

U.S. policymakers forecast two quarter-point interest rate cuts later this year, consistent with their outlook from three months ago, even as they anticipate slower economic growth and higher inflation. On Wednesday, the Fed kept its benchmark overnight rate unchanged in the 4.25%-4.50% range.