The British pound fell in the European market on Thursday against a basket of global currencies, extending its losses for the second consecutive day against the US dollar, moving away from its two-month high, under pressure from accelerating correction and profit-taking, in addition to the continued recovery of the US currency from multi-year lows.

This decline comes ahead of the Bank of England’s monetary policy decisions at the conclusion of its sixth regular meeting of 2025, where interest rates are widely expected to be left unchanged at 4.00%, the lowest level since February 2023.

Price Overview

GBP/USD today: The pound fell by 0.15% to $1.3609, from an opening of $1.3626, with a high of $1.3636.

On Wednesday, the pound lost 0.2% against the dollar — its first decline in three days — due to correction and profit-taking, after earlier touching a two-month high at $1.3727.

US Dollar

The US dollar index rose about 0.2% on Thursday, marking a second straight gain, continuing its recovery from a 3½-year low of 96.22, reflecting renewed strength in the greenback against a basket of global currencies.

Beyond bargain-hunting from lower levels, the dollar’s rebound followed a cautious Federal Reserve stance regarding further interest rate cuts in the coming period.

The Fed cut rates by a quarter point on Wednesday, as widely expected in global markets, and signaled that borrowing costs would be reduced steadily for the rest of this year.

Fed Chair Jerome Powell described the latest policy move as a “risk-management cut” in response to labor market weakness, but noted the central bank does not need to rush into deeper monetary easing.

UK Interest Rates

Following mixed inflation data on Wednesday, market pricing for a 25-basis-point BoE rate cut at today’s meeting remained below 20%.

Bank of England

Global markets widely expect the Bank of England to announce on Thursday that it will leave interest rates unchanged at 4.00%, the lowest since February 2023.

The BoE interest rate decision, monetary policy statement, and the vote breakdown are due at 12:00 GMT.

Governor Andrew Bailey will hold a press conference at 12:30 GMT to comment on the policy meeting’s outcome, the inflation battle, and the future path of interest rates.

Outlook for the British Pound

At Economies.com, we expect that if the Bank of England and Andrew Bailey deliver less hawkish comments than markets anticipate, odds of a rate cut in November will rise, leading to further declines in the pound.

The New Zealand dollar fell broadly in Asian trading on Thursday against a basket of major and minor currencies, extending its losses for the second consecutive day against the US dollar, retreating from a seven-week high amid accelerating correction and profit-taking, in addition to the continued recovery of the greenback from multi-year lows.

Data released in New Zealand showed a sharper-than-expected economic contraction in the second quarter, boosting expectations of deeper interest rate cuts by the Reserve Bank of New Zealand this year.

Price Overview

NZD/USD today: The New Zealand dollar dropped about 0.9% to 0.5911, from an opening of 0.5963, after touching a high of 0.5970.

On Wednesday, the kiwi ended down more than 0.4% versus the US dollar — its first loss in three sessions — after earlier hitting a seven-week high of 0.6008 amid correction and profit-taking.

US Dollar

The US dollar index rose about 0.2% on Thursday, extending gains for a second straight session, recovering from a 3½-year low of 96.22, reflecting continued rebound against a basket of global currencies.

Beyond bargain-hunting, the dollar’s rebound followed a cautious Federal Reserve stance on further rate cuts. On Wednesday, the Fed trimmed rates by a quarter-point as expected, and Chair Jerome Powell described the move as a “risk-management cut” in response to labor market weakness, stressing the Fed is in no rush to ease aggressively.

Sharp Economic Contraction in New Zealand

Fresh data showed New Zealand’s GDP shrank 0.9% in Q2, the steepest drop since Q3 last year, far worse than forecasts of a 0.3% decline. The economy had grown 0.9% in Q1.

New Zealand Interest Rates

Following the data, odds of a 25 bps cut at the October 8 RBNZ meeting jumped above 90%.

Futures pricing now points to a policy rate of 2.5% by year-end.

Westpac revised its forecast for the next RBNZ meeting to a half-point cut instead of a quarter-point.

The US Federal Reserve announced on Wednesday its decision to cut the benchmark interest rate by 25 basis points, from 4.50% to 4.25%, in a move that was broadly in line with market expectations.

The massive surge in energy demand from data centers is driving an “all options on the table” approach to energy security. The AI boom is pushing investments toward alternative energy sources that were previously overlooked and underfunded, including geothermal energy. While this carbon-free source currently makes up just 0.4% of the US energy mix, many experts believe it is poised for a breakout, supported by bipartisan backing, advancements in geothermal technologies, and rapidly shifting dynamics in energy markets.

Cindy Taff, CEO of geothermal company Sage Geosystems, told The Hill earlier this year: “This will be the decade of geothermal energy.” She added that investments are rising sharply, with a favorable political environment supporting strong R&D in the sector. Although geothermal remains “10 to 15 years behind” wind and solar, Taff and other industry insiders are optimistic about its emerging commercial potential.

The US Department of Energy projects that next-generation “enhanced” geothermal systems could provide about 90 gigawatts of clean energy by 2050 — enough to power more than 65 million homes. Still, the sector faces major hurdles, primarily high upfront and operational costs that constrain expansion.

A 2019 DOE report titled GeoVision: Harnessing the Heat Beneath Our Feet noted: “Growth as a national geothermal solution requires overcoming major technical and non-technical barriers to reduce costs and lower risks. Subsurface exploration remains the biggest obstacle due to its high costs, complexity, and risks.”

But the investment landscape has shifted dramatically since 2019, especially with the tech sector stepping in to support geothermal development in response to soaring data center demand. Big players like Meta and Alphabet (Google and Facebook’s parent) have partnered with geothermal startups. Breakthroughs in deep drilling to reach high underground temperatures have also accelerated in recent years, with startups borrowing tools and techniques from hydraulic fracturing and even nuclear fusion research. These companies are also innovating to address challenges like high water consumption, at a time when capital is flowing into the sector.

In Utah, one next-generation geothermal startup believes it has found a way around some of these costs. Rodatherm Energy Corp., which recently raised $38 million in Series A funding, announced plans for a pilot project using a closed-loop geothermal system that relies on refrigerants instead of water. According to Bloomberg: “Building a sealed, closed system that uses refrigerants similar to those in heat pumps instead of water to generate electricity would allow the company to cut costs and improve financial viability.” The components normally corroded by water would not need frequent replacement, while conserving water is critical in Utah, the project site.

Bloomberg added that Rodatherm is one of many geothermal firms benefitting from the “AI-driven energy boom.” Enhancing geothermal’s potential is seen as a possible game-changer for both the AI sector and US energy security, since geothermal can provide near-unlimited clean power without the variability tied to wind and solar.

A recent report by the independent New York–based Rhodium Group noted: “Geothermal energy could economically meet up to 64% of expected demand growth by the early 2030s, provided core assumptions about the sector and the political and economic environment hold.”

The report concluded: “Policymakers, tech companies, and geothermal developers must move quickly to achieve the speed and scale needed to seize this opportunity. Geothermal energy could be a key solution to meeting the rising electricity needs of data centers.”