Currency news / May 8, 2025

UK–US trade deal to be announced?

3 min read Thanim Islam

Thanim IslamMay 8, 2025

Market snapshot:

Fed holds rates and indicates no rush
Over to the BoE this afternoon

Yesterday's currency recap

The Fed (Federal Reserve) meeting went, as expected, with no rate cut. Jerome Powell stayed on the hawkish side, suggesting he is in no rush to cut rates further. He highlighted stagflation risks but admitted that he and the Fed have no idea of the potential tariff implications yet. Dollar was marginally higher last night and that has continued this morning.

The pound was buoyed during Asian hours on reports that President Trump is set to announce a trade pact between the UK and US.

Today's GBP rates

Currency pair	Daily move*	Indicative rate**
GBPAUD	0.35%	2.0656
GBPCAD	-0.20%	1.8384
GBPCHF	-0.24%	1.0963
GBPDKK	0.02%	8.7748
GBPEUR	0.02%	1.1761
GBPJPY	0.50%	191.448
GBPNOK	0.12%	13.7499
GBPNZD	0.36%	2.2329
GBPSEK	0.10%	12.8168
GBPUSD	-0.17%	1.3347

*Daily move - against G10 rates at 7:00 am, 08.05.25
** Indicative rates - interbank rates at 7:00 am, 08.05.25

Key data points

Currency	Event	Period	Consensus	Previous
GBP	BoE Interest Rate	May	4.25%	4.50%
USD	Initial Jobless Claims	May 3	230,000	241,000

What we think

All eyes on the Bank of England (BoE) at noon today. It is widely expected the bank will cut rates by 0.25%, taking the base rate down to 4.25% - the lowest since April 2023. Furthermore, markets are expecting a dovish narrative from the bank - we are keen to see how members of the MPC have voted. Anything to suggest that the BoE will be looking to cut rates lower than what markets are expecting (down to 3.5% by the end of the year), then we would expect the pound to be hit in a negative way.

Read more about the BoE's interest rate decisions here: When is the next BoE interest rate decision?

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