Pound plummets as BoE cuts rates and slashes UK growth forecast
Philip McHugh February 7th 2025 - 2 minute read
Pound (GBP) slumps on dovish BoE rate cut
The pound (GBP) tumbled on Thursday following a 25 basis point interest rate cut from the Bank of England (BoE).
While the rate cut was largely priced in, GBP investors were spooked by the surprisingly dovish split within the bank’s Monetary Policy Committee, as well as the halving of the bank’s 2025 UK growth forecast.
BoE Chief Economist Huw Pill is set to speak today. If he seeks to temper BoE rate cut bets, the pound may rally.
Euro (EUR) wavers despite positive German data
The euro (EUR) found itself trapped in a narrow range yesterday. Bolstering EUR sentiment was data showing a much stronger-than-expected rebound in German factory orders in December.
However, the single currency’s upside potential was ultimately capped as a result of its negative correlation with the US dollar (USD).
Today’s session kicked off with the publication of Germany’s latest industrial production figures, with the euro potentially facing an uphill battle today, following a much sharper-than-expected slump in factory output at the end of 2024.
US dollar (USD) bolstered by risk-off flows
The US dollar strengthened yesterday as a negative shift in market risk appeal bolstered the currency’s safe-haven appeal.
However, these gains were tempered by the latest US initial jobless claims, following a larger-than-expected increase in new unemployment claims at the start of February.
All eyes will be on the latest US non-farm payroll figures today. Expect to see USD exchange rates strengthen if January’s figures report another healthy expansion in the US labour market.
Canadian dollar (CAD) buoyed by rising oil prices
The Canadian dollar (CAD) edged higher on Thursday, supported by a modest rebound in oil prices.
Coming up, the ‘Loonie’ may come under pressure this afternoon as an expected rise in domestic unemployment is expected to stoke Bank of Canada (BoC) rate cut bets.
Australian dollar (AUD) flat in cautious trade
The Australian dollar (AUD) traded sideways overnight on Thursday as investors erred on the side of caution ahead of the latest US payroll figures.
New Zealand dollar (NZD) wavers in mixed trade
The New Zealand dollar (NZD) was also rangebound in overnight trade amid an uneven market mood as we head into the weekend.
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Written by
Philip McHugh