February 6, 2025 – Written by Frank Davies

STORY LINK Pound Sterling in Freefall Against Dollar and Euro Following BoE Rate Cut

The Pound US Dollar exchange rate plunged on Thursday following the Bank of England’s (BoE) latest interest rate decision.

At the time of writing, GBP/USD was trading at approximately $1.2411, up roughly 0.4% from the start of Thursday’s session.

Pound (GBP) Tanks as BoE Cut Rates

On Thursday, the Pound (GBP) weakened against most other currencies after the Bank of England’s latest interest rate decision.

As anticipated, the central bank reduced the rate from 4.75% to 4.5%.

However, the split in the BoE’s voting and the dovish forward guidance led to expectations of further rate cuts, which put substantial pressure on the value of Sterling.

US Dollar (USD) Ticks up following Upbeat Data

Although the US Dollar (USD) surged against the Pound on Thursday, it also gained ground against most of its peers.

This was in part driven by the release of the latest US initial jobless claims data.

The report showed an increase from 208,000 to 219,000, above the expected 213,000.

Despite a cautiously optimistic market mood and the US Dollar’s status as a primary safe-haven currency, the ‘Greenback’ strengthened
against the majority of its counterparts following the release.

GBP/USD Exchange Rate Forecast: US Labour Data in the Spotlight

Looking ahead, the main driver of movement for the Pound US Dollar exchange rate on Friday will likely be the release of several US economic data points.

First up, the US will publish its latest non-farm payrolls data for January.

If the data confirms a decrease in new job creations, it could weaken the US Dollar at the end of the week.

Additionally, the US will release its latest unemployment rate, which is expected to remain unchanged at 4.1% for the same time period.

With no UK economic data releases scheduled for Friday, GBP exchange rates may lack a clear direction by the end of the week.

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TAGS: Pound Dollar Forecasts