The U.S. dollar retreated slightly from multi-month highs on Thursday, as renewed appetite for riskier assets prompted traders to trim safe-haven positions. The pullback came even as markets awaited the Bank of England’s monetary policy decision, where investors expect a cautious or dovish tone.

The greenback traded at $1.1505 against the euro, marginally weaker than Tuesday’s three-month peak of $1.1469. Despite the dip, the dollar remains firmly supported by higher U.S. yields and lingering uncertainty over the global economic outlook.

The British pound hovered around $1.3065, edging away from its seven-month low of $1.3011 hit overnight. Market participants are watching closely to see whether the BoE will signal a near-term rate cut, amid growing expectations of policy easing in response to softening growth prospects. Analysts estimate a 40% probability of a rate reduction from the current 4%, with a 25-basis-point cut already priced in for early 2026.

“It’s difficult to see sterling getting a pop on this one. Even if they don’t cut, we think they’ll signal that one is coming,” said Rodrigo Catril, senior currency strategist at National Australia Bank. A decisive break below $1.30, he noted, could push the pound toward April’s low of $1.2712.

Meanwhile, the Australian and New Zealand dollars led gains in the risk-sensitive segment, buoyed by a rebound in global equities following a pause in the recent tech sell-off. The Aussie rose about 0.9% from Wednesday’s three-week low to $0.6513, while the Kiwi climbed to $0.5666 after touching a seven-month trough.

Traders said the moves reflected improving market sentiment, even as U.S. yields climbed following upbeat labor data and suggestions from the Treasury Department of increased debt issuance.

“The market was a little more sensitive to the improvement in risk appetite,” Catril added, though he cautioned that a sustained decline in the dollar would require clearer economic signals — a challenge as the prolonged U.S. government shutdown limits data flow.

The dollar held steady at ¥153.98 against the yen, while the dollar index hovered around 100.06, showing limited movement overall.

In the cryptocurrency market, Bitcoin continued its advance, holding above the $100,000 mark to trade at $104,000, underscoring renewed optimism in digital assets amid broader market stabilization.