NEW YORK: The dollar rebounded across the board on Wednesday as recent risk-on sentiment reversed and US stocks dropped, with the euro and sterling down more than 1% each.

The euro was down 1.4% at $0.9852 after rising 1.7% on Tuesday.

Sterling was down 1.8% to $1.1268, after rising for six straight sessions. Its fall extended slightly as UK Prime Minister Liz Truss pledged to bring down debt as a share of national income, just over a week after the government’s plans to slash taxes and ramp up borrowing spooked markets.

Adding to the pressure on the pound, data showed Britain’s private-sector economy last month suffered the sharpest contraction in activity since a COVID-19 lockdown early last year.

Recent gains for most major currencies against the dollar have been underpinned by hope among investors and traders that the US Federal Reserve will raise interest rates by less than previously expected.

US Fed Governor Philip Jefferson reiterated overnight that inflation was the top target for policymakers and that growth would suffer in efforts to bring it down.