Currency news

Fed and BoE in focus

Head of FX Analysis at Equals Money
-
3
min read
Published:
May 6, 2025
  • Bloomberg pound index falls for 4th consecutive week – another weekly loss ahead?
  • Stronger domestic US data pushes back next rate cut expectations to July


Currency recap

Friday's non-farm payrolls report came in higher than expected at 177,000 versus the forecast print of 138,000, seeing markets ease the number of additional rate cuts expected this year and moving the next rate cut from June to July. The dollar gained and then lost on the numbers before ultimately finishing unchanged on the week. Stocks also gained on the back of the numbers, with equities now higher than they were during the tariff announcements on the 2nd April.

Sterling finished the week broadly lower and the Bloomberg pound index has now posted its 4th weekly decline.

Yesterday, US services numbers came in stronger than expected, showing that the sector continues to expand despite concerns of tariffs. Dollar moves were muted on the back of this.

Today's GBP rates

Currency pair Daily move* Indicative rate**
GBPAUD -0.88% 2.0619
GBPCAD -0.37% 1.8327
GBPCHF -0.23% 1.0987
GBPDKK -0.27% 8.7534
GBPEUR -0.27% 1.173
GBPJPY -0.52% 192.065
GBPNOK -0.34% 13.8075
GBPNZD -0.72% 2.2316
GBPSEK -1.20% 12.7858
GBPUSD 0.07% 1.3289


*Daily move - against
G10 rates at 5:00pm, 02.05.25

** Indicative rates - interbank rates at 5:00pm, 02.05.25

What we think

Fed week with no change in interest rates expected. But in light of recent criticism from Trump pushing for lower interest rates, the spotlight will be on Fed chair Powell and which way he pushes the interest rate narrative.

Recent data has shown that even before tariffs were announced the US economy was already stagnating, with growth in Q1 at -0.3% and the core PCE inflation number coming in much higher than expected. So, more than likely, the Fed will continue its hawkish narrative, given last week's job numbers came in better than expected. So overall there is potential for the dollar to gain this week.

We also have the Bank of England meeting this week, where markets are currently fully pricing-in a 25bp rate cut and expectations are for some dovish commentary, potentially paving the way for a series of back-to-back rate cuts this year. The impact of tariffs on growth and inflation are the key concerns for members of the MPC. Market pricing sees a 56% chance of a cut in June, so any dovish tones will likely increase this probability. There is potential for sterling to continue to be lower this week.

Read more about the BoE and Fed's interest rate meetings here:

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