Pound Plummets as Fed Rate Hike Outpaces BoE

The British Pound has taken a hit against the US Dollar, falling to just under 1.3400 after the Federal Reserve raised interest rates to 3.75-4.00%. This marks the first time this year that American money pays more than British money.

The Bank of England is set to respond in 17 hours, but forecasters are predicting it will hold its rate at 3.75%, as has been the case since December 2025. The committee that sets interest rates has held five meetings running without a change.

Interest rates have become a key factor in currency markets, with higher rates generally strengthening a country's currency and making it more attractive to global investors. However, the BoE's decision will likely be influenced by its goal of keeping inflation at 2%, which is currently above target at 3.1%.