Reports indicate that Israel is close to reaching a ceasefire agreement with Hezbollah forces in Lebanon, sparking hopes for easing long-standing tensions in the Middle East. Additionally, the nomination of Scott Bessent as the U.S. Secretary of Treasury has helped reduce market uncertainty and eased concerns over escalating trade wars.

The U.S. Dollar Index has retreated from its two-year high due to a sharp decline in U.S. government bond yields. Moreover, the rally in global stock prices has added further pressure on the dollar, a safe-haven asset, while supporting the British pound.

At the same time, the pound sterling continues to gain support from the diminished likelihood that the Bank of England (BoE) will cut interest rates next month. This is due to rapidly rising inflation, which has once again exceeded the central bank's target.

Source: Fxstreet