FX.co ★ Sterling Little Changed on US-UK Trade Deal

The British pound maintained its position around $1.33 following the announcement by President Trump of a trade deal between the US and the UK. Although the agreement retained the previously imposed 10% tariffs on UK goods, it opened opportunities for US procurement and postponed decisions regarding UK market access for American agriculture and beef, indicating a limited initial scope for the deal. Additionally, the Bank of England reduced its key interest rate by 25 basis points, a move that was largely anticipated. However, the bank adopted a more assertive tone, highlighting that a gradual and measured withdrawal of monetary policy support is appropriate. It also indicated that interest rates will remain at levels necessary to mitigate inflation risks. Contrary to what was expected to be a unanimous decision, two policymakers voted against the interest rate change, thereby reinforcing the central bank's cautious approach. Consequently, investors slightly adjusted their expectations for future rate cuts, predicting approximately 59 basis points of reductions by year-end.