The British pound rose in European trading on Thursday against a basket of global currencies, extending gains for the fifth consecutive day against the US dollar and reaching its highest level in a week, supported by weakness in the US currency in the forex market.

This rise comes ahead of the Bank of Englands monetary policy decision at the conclusion of its fifth regular meeting of 2025, where the bank is widely expected to cut UK interest rates by 25 basis points to a range of 4.00% the lowest level since February 2023.

Price Overview

The pound rose against the dollar by 0.15% to $1.3371 the highest in a week from todays opening price of $1.3351, after recording a low of $1.3346.

On Wednesday, the pound rose by 0.45% against the dollar, marking a fourth straight daily gain amid broad weakness in the US dollar against major and minor currencies.

US Dollar

The US dollar index fell on Thursday by 0.1%, deepening losses for a second session in a row and hitting a two-week low of 98.11 points, reflecting continued decline in the greenback against a basket of global currencies.

Minneapolis Fed President Neel Kashkari said Wednesday that the Federal Reserve may need to cut interest rates in the near term in response to slowing economic growth in the US.

Following his remarks, the probability of a Fed rate cut in September rose from 90% to 94%.

Markets are also focused on President Donald Trumps nominations to the Federal Reserve Board following the resignation of Fed Governor Adriana Kugler last Friday, as well as his choice for the next Commissioner of the Bureau of Labor Statistics.

Trump stated on Tuesday that he would soon announce decisions regarding Kuglers replacement in the short term, including his pick for the next Fed Chair. Treasury Secretary Scott Bessent was ruled out as a candidate to succeed current Fed Chair Jerome Powell, whose term ends in May 2026.

Trump said Bessent "does not want" to be Fed Chair, but four other candidates remain in the running.

Bank of England

Global markets broadly expect the Bank of England to announce a 25-basis-point interest rate cut on Thursday, lowering rates to a range of 4.00% the lowest since February 2023 marking the third rate cut this year.

At 12:00 GMT, the BOE is set to release its interest rate decision, monetary policy statement, and voting breakdown.

BOE Governor Andrew Bailey will speak at a press conference at 12:30 GMT to comment on the policy meeting outcome, inflation developments, and the future path of interest rates.

Pound Outlook

At Economies.com, we expect that if the Bank of England and Governor Andrew Bailey deliver more hawkish-than-expected remarks, market expectations of a September rate cut could decline, paving the way for further gains in sterling levels.