Key Points:
- The pound rose to its highest level in two and a half years.
- The dollar loses control over foreign exchange trading.
- The Bank of England kept interest rates unchanged.
The British currency surged against the US dollar after the Bank of England decided to keep interest rates on hold, a sharp departure from the Fed's policy.
- of
GBPUSD pair The British pound surged on Friday, continuing a three-day strong rally fuelled by moves on both sides of the Atlantic, where the Bank of England decided to keep interest rates unchanged at 5% on Thursday despite expectations of a cut. The pound rose to a two-and-a-half-year high against the dollar, reaching $1.3330 this morning, and has risen 180 pips, or 1.4%, in the past three sessions. - In the United States, the Federal Reserve The US Federal Reserve (Fed) has launched a campaign of interest rate cuts after raising interest rates to a 23-year high and keeping them there for several months. Fed Chairman Jay Powell announced on Wednesday that the US central bank has decided to cut interest rates by half a percentage point and is considering cutting them by another half a percentage point by the end of 2024. As markets realized the impact on the US dollar, they began selling off their dollar holdings.
- The British pound is It's been a good year. Since the start of trading in January, the pound has risen by more than 5.5% against the weak dollar. What's next? The movement of the pound will be heavily influenced by the development of UK interest rates. Bank of England Governor Andrew Bailey is optimistic that interest rates will continue to fall after the first rate cut in August. “We need to be careful not to cut interest rates too quickly or by too large a margin, as it is vital that we keep inflation low,” Bailey said.
