Bank of England cut rates as expected
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Daily Currency Update
The Bank of England gave its latest interest rate decision yesterday and, as predicted, they cut rates by 25 basis points to 4.5%. The surprise came from the member votes, with Catherine Mann joining the other eight committee members in agreeing to the cut. On the previous two rate cuts, Mann remained un-swayed in her decision to hold but with one eye on the mortgage market she has now pointed toward a 50 basis point cut in the future. Forward guidance suggests that we will see a pause in March, but then quarterly cuts are expected taking the base rate down to 3.5% before the end of 2025. Prior to the announcement, sterling was on the decline against both the EUR and USD. GBP/EUR dropped to a session low 1.1940 and GBP/USD touched 1.12375, but both pairings recovered following the release.Key Movers
US unemployment claims missed expectation yesterday, seeing a weekly increase of 11,000. This acted as a prelim to today US jobs data where we anticipate non-farm employment change and the unemployment rate. The non-farm data is projected to show growth of 169,000, which is markedly lower than the 256,000 in December, but in-line with the past three month average. The unemployment rate is expected to see no change at 4.1%. While the takeaway could be that job creation is slowing, the broader view is that the employment picture is holding solid, and it’s not likely to be a problem for the Federal Reserve any time in the near future. This would favour the FED's recent ‘wait and see’ view on further interest rate decisions.GBP/USD is back above 1.2450 this morning and EUR/USD has touched 1.0400 in the past hours. Volatility might be seen before and around the employment releases, alongside any additional comments from President Trump around Tariffs.
Expected Ranges
- GBP/USD: 1.2360 - 1.2540 ▲
- GBP/EUR: 1.1940 - 1.2030 ▲
- GBP/AUD: 1.9680 - 2.0010 ▲
- EUR/USD: 1.0350 - 1.0450 ▲