British Pound Stabilizes Amid U.S.-UK Trade Deal Buzz and BoE Rate Cut Speculations

The currency market saw the British pound stabilize on Thursday, following a report that U.S. President Donald Trump was poised to announce a trade agreement between the United States and Britain. Shortly after the news from the New York Times, the sterling gained 0.5% against the dollar before retreating to a flat standing at $1.3287 as of 0645 GMT.

Investors are now keenly awaiting the Bank of England's interest rate decision, with a widespread expectation of a 25-basis-point cut to 4.25%. Observers predict the BoE will implement three further rate cuts before the year's close, potentially lowering the rate to 3.5%. Deutsche Bank's senior economist Sanjay Raja indicated expectations for dovish forward guidance in upcoming BoE communications.

Since the BoE's February monetary policy report, significant developments have unfolded, notably Trump's global tariff proposals that entangle the UK and other trading nations in a trade war. Securing a U.S. trade deal marks Britain's second major agreement in a week, following a successful trade pact with India.

(With inputs from agencies.)