GBP/USD remains below 1.3550 as US Dollar recovers ground, signals a technical correction

• GBP/USD may regain its ground as the US Dollar may return under downward pressure amid US economic uncertainty.
• The soft US economic data raised the odds of the Fed delivering two rate cuts in 2025.
• Trump granted UK exporters a temporary relief from the steep 50% tariffs on steel and aluminium.

GBP/USD retraces its recent gains from the previous session, trading around 1.3550 during the Asian hours on Thursday. The pair depreciates as the US Dollar (USD) gains ground amid a technical correction. The downside of the pair could be limited as the Greenback may receive downward pressure from dampened risk sentiment amid rising tariff uncertainty and its potential to hurt growth in the US economy.

Institute for Supply Management's (ISM) Services Purchasing Managers Index (PMI) fell to 49.9 in May, from April's 51.6. This reading surprisingly fell short of the expected 52.0. Meanwhile, US ADP private sector employment added 37,000 jobs in May, against a 60,000 increase (revised from 62,000) recorded in April, far below the market expectation of 115,000.

US President Donald Trump posted on Truth Social on Wednesday, calling on Federal Reserve (Fed) Chairman Jerome Powell to lower the policy rate. "ADP NUMBER OUT!!! "Too Late" Powell must now LOWER THE RATE. He is unbelievable!!! Europe has lowered NINE TIMES," Trump said.

Meanwhile, Minneapolis Fed President Neel Kashkari noted that the labor market is showing some signs of slowing down. However, persistent uncertainty prevails over the economy, and the Fed must stay in wait-and-see mode to assess how the economy responds to the uncertainty.

On Wednesday, S&P Global UK Purchasing Managers' Index (PMI) data reported Composite PMI, which rose to 50.3 in May, from April's 48.5 reading. This reading came higher than the preliminary estimate of 49.4. Meanwhile, the Services PMI edged higher to 50.9, indicating a weak but marginal growth.

Moreover, the United Kingdom's (UK) exporters will face the previous 25% tariff rate, as President Trump signed an executive order on Tuesday to grant temporary relief from the steep 50% US tariffs on steel and aluminium.