Sterling shines after bullish BOE meeting

The British pound rose with the opening of the European market on Friday against a basket of global currencies, extending its gains for the sixth consecutive day against the US dollar and recording its highest level in two weeks, on the verge of achieving a weekly gain, thanks to the hawkish monetary policy meeting of the Bank of England.

The Bank of England cut interest rates to their lowest level in two and a half years, and the vote on the rate cut decision showed a sharp split among members regarding the seriousness of continuing to ease monetary policy, which led to a decline in expectations of a British interest rate cut in the upcoming September meeting.

Price Overview

• Pound exchange rate today: the pound rose against the dollar by 0.1% to $1.3454 — the highest since July 25 — from the opening price of $1.3442, and recorded the lowest level at $1.3434.

• The pound rose on Thursday by 0.65% against the dollar, marking a fifth consecutive daily gain, supported by the results of the Bank of England’s monetary policy meeting.

Weekly Trading

Over the course of this week, which officially ends at today’s settlement, the British pound is up more than 1.3% against the US dollar so far, on the verge of posting its biggest weekly gain since late June.

Bank of England

In line with expectations, the Bank of England decided on Thursday to cut interest rates by 25 basis points to a range of 4.00% — the lowest level since February 2023 — in an effort to support the recently slowing British economy.

The decision passed with 5 members voting in favor and 4 members voting to keep rates unchanged. This vote ran contrary to market expectations, which had forecast 8 members to vote for the cut and only 1 for keeping rates steady.

This marks the third rate cut this year and the fifth by the Bank of England since the beginning of its monetary policy easing cycle in August 2024.

The Bank of England said in a statement: the direct impact of US tariffs is less severe than previously expected, but the general uncertainty surrounding the tariffs continues to weigh on sentiment.

Andrew Bailey

Bank of England Governor Andrew Bailey said after Thursday’s meeting: interest rates remain on a downward path, but any future rate cuts must be implemented gradually and cautiously. Bailey added: it is important not to cut the bank rate too quickly or excessively.

UK Interest Rates

• Traders have scaled back their bets on the Bank of England easing interest rates, now expecting additional cuts of just 17 basis points this year.

• The pricing of the probability of a 25-basis-point interest rate cut by the Bank of England in the September meeting is currently stable below 25%.