After data revealed Britain's economy tipped into recession in the second half of last year, together with the strength of the Dollar at the end of the month and quarter, Sterling eased on Thursday.

The Pound fell 0.2% at the time of writing but remained on track for a 0.2% gain this week against the greenback, ahead of US inflation data due out on Friday. Meanwhile, the Sterling was steady against the Euro, trading at 85.63 pence.

Forecasts in the market for the initial rate reduction at the Federal Reserve's June meeting have fallen slightly. Current pricing suggests a 60% likelihood, down from 67% this time last week, as indicated by the CME FedWatch tool.

Furthermore, Sterling also dipped against the Japanese Yen, falling 0.24% to 190.79 Yen, after hitting its highest level against Japan's currency this week since August 2015, Reuters reports.

Britain's GDP contracted by 0.1% in Q3 and 0.3% in Q4, remaining the same as preliminary estimates, according to the Office for National Statistics.

The markets had already taken into account a slight economic downturn towards the end of 2023, and the figures did not cause a significant response in the value of Sterling or alter expectations regarding monetary policy.

In addition, the Bank of England recently hinted at the possibility of reducing interest rates, leading to an upsurge in UK government bonds but weakening the value of the Pound.

Indeed, in March, two-year gilts, which are particularly sensitive to shifts in rate expectations, have fallen by 25 basis points, marking their first monthly decline since November

Furthermore, according to futures markets, traders estimate there's about a 20% probability of the Bank of England lowering rates at its upcoming meeting in May.

However, the meeting in June remains the most probable scenario, with a 55% chance of a rate cut, the Reuters report adds.