The Pound drops below its long-run average as the Fed's rate passes Britain's
The Fed raised rates by a quarter point to 3.75-4.00% on Wednesday, the first hike since 2023, and the vote was 12-0. The middle of the new range is 3.875%, which puts US rates above the UK's 3.75% for the first time this year.
On Wednesday, the US Federal Reserve raised its interest rates by a quarter point to between 3.75-4.00%, marking the first increase since 2023 and the first time US rates have surpassed the UK's 3.75% rate. This led to the GBP/USD currency pair trading below 1.3400, its lowest level in over a year. The Bank of England's Bank Rate remains at 3.75%, unchanged since December 2025.
The Fed's forecasts anticipate their rate to rise to 4.1% by the end of 2025 and stay there through 2027. The Bank of England is also expected to maintain its rate at 3.75% during its Thursday meeting. UK inflation for August came in at the forecasted 3.1%. Factory gate prices rose 0.7%, above expectations of 0.3%. The Pound Sterling, the oldest currency in the world and the fourth most traded in foreign exchange markets, is expected to trade below the 1.3400 level, with support at 1.3350 and 1.3300.
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