The U.S. Dollar gained strength on Monday as investors digested the Bank of England’s recent rate cut and ongoing global trade uncertainties. The BoE’s decision to lower interest rates, coupled with concerns over U.S. tariffs, has influenced currency movements across major pairs.
Today’s Currency Shifts
- EUR/USD: fell 0.29% to 1.1220
- GBP/USD: slipped 0.14% to 1.3286
- AUD/USD: rose 0.23% to 0.6432
- NZD/USD: increased 0.18% to 0.5924
- USD/JPY: gained 0.51% to 146.08
- USD/CHF: climbed 0.49% to 0.8347
- USD/CAD: edged down 0.09% to 1.3926
Key Market Drivers
Bank of England’s Rate Cut Amid Trade Concerns
On May 8, the Bank of England reduced its benchmark interest rate by 25 basis points to 4.25%, citing concerns over the impact of new U.S. tariffs on global economic growth. The decision revealed a split among policymakers, with two members advocating for a larger 50 basis point cut and two others favoring no change.
The BoE anticipates that the tariffs will reduce the UK economy by 0.3% over three years and help bring inflation to target sooner. It revised down its inflation forecast for 2025 to a peak of 3.5% and now expects inflation to return to its 2% target by early 2027.
Economic growth for 2025 is projected at 1%, slightly up from the February forecast. However, the Bank of England has lowered its 2026 growth forecast. It also predicts slower pay growth and a rise in unemployment. The central bank introduced new scenarios to reflect uncertainty in global trade and policy conditions. It maintains a cautious stance on future rate changes. The next Bank of England interest rate decision is scheduled for Thursday, June 19, 2025.
The next UK GDP release is set for Thursday, May 15, 2025, at 7:00 AM. This will include the GDP monthly estimate for March 2025 and the first quarterly estimate for Q1 2025.
Global Trade Tensions Influence Market Sentiment
The recent imposition of U.S. tariffs has introduced volatility into the markets. While some progress in trade talks has been reported, the overall uncertainty continues to affect investor confidence and currency valuations.
Currency Watch – Key Moves Today
| Pair | Price | Daily Change |
|---|---|---|
| EUR/USD | 1.1220 | ▼ 0.29% |
| GBP/USD | 1.3286 | ▼ 0.14% |
| AUD/USD | 0.6432 | ▲ 0.23% |
| NZD/USD | 0.5924 | ▲ 0.18% |
| USD/JPY | 146.08 | ▲ 0.51% |
| USD/CHF | 0.8347 | ▲ 0.49% |
| USD/CAD | 1.3926 | ▼ 0.09% |
Looking Ahead
Investors will closely monitor upcoming economic data releases and any further developments in trade negotiations. The Bank of England’s cautious stance suggests that significant policy changes are unlikely in the near term, keeping markets attentive to economic indicators and geopolitical events.