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The pound surged to a near four-year high against the dollar after reports suggested President Trump might replace Federal Reserve Chair Jerome Powell sooner than expected. This sparked concerns about the Fed's independence and potential inflationary impacts from Trump's tariffs. The dollar weakened as markets reacted to the uncertainty surrounding the Fed's leadership and the potential for a less independent approach to interest rate policy. While JP Morgan lowered recession probabilities, concerns remain high, influencing traders to bet against the dollar.

Prepared by Christopher Adams and reviewed by editorial team.