The British pound held steady on Thursday following reports that U.S. President Donald Trump was preparing to announce a trade deal between the United States and the United Kingdom. As market attention shifted towards an anticipated interest rate cut by the Bank of England (BoE), sterling initially rose by 0.5% against the dollar after report, before settling at $1.3287 by 0645 GMT.
The BoE is expected to lower its main interest rate by 25 basis points to 4.25% later in the day. Investors are factoring in additional rate cuts, with expectations that the benchmark rate could fall to 3.5% by the end of the year.
Sanjay Raja, a senior economist at Deutsche Bank, commented, “We think the vote count, forecasts, updated scenarios, and forward guidance will err on the more dovish side.”
Since the BoE’s last monetary policy report in February, several factors have altered the economic landscape, including President Trump’s proposals for global tariffs, which have drawn the UK and other major economies into a trade conflict.
A potential trade deal with the U.S. would mark Britain’s second such agreement in a week, following a free trade pact secured with India.
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