Ella 
The pound fell to around 1.2750 against the dollar during London trading on Tuesday. The dollar’s rebound from fresh six-month lows triggered the pair’s decline. The U.S. Dollar Index (DXY), which tracks the greenback’s value against six major currencies, was back up near 103.00.
The dollar’s outlook remains fragile as market participants fret over heightened speculation about a U.S. recession and the Federal Reserve’s announcement of an emergency interest rate cut.
Market expectations for a potential recession in the United States have increased following a string of weak U.S. economic data. The unemployment rate rose to 4.3%, the highest since November 2021, labor demand slowed, and the manufacturing Purchasing Managers’ Index (PMI) accelerated contraction in July. However, if an economy’s gross domestic product (GDP) shrinks for two consecutive quarters, it is considered a technical recession, while the situation in the United States is exactly the opposite, as the US economy grew at an annualized rate of 2.8% in the second quarter. The U.S. economy grew at twice the rate from January to March.
Additionally, the Purchasing Managers’ Index (PMI) for the U.S. services sector, which accounts for two-thirds of the economy, expanded at a faster pace in July after contracting in June. The PMI report showed services sector activity expanded faster than expected at 51.4. Investors expected the services PMI to increase to 51.0 from the previously reported 48.8.
