GBPUSDGBP/USDOANDA:GBPUSDShavyfxhubUnited States (FOMC) Bank Interest Rate The Federal Reserve's target Federal Funds Rate for banks is 4.25%–4.50% as of the July 29–30, 2025 FOMC meeting. The effective federal funds rate (EFFR), which is the market overnight rate between banks, is approximately 4.33%. This determines the cost of short-term borrowing between U.S. banks and serves as a benchmark for lending rates across the financial system. United Kingdom (Bank of England) Bank Interest Rate The Bank of England base rate for banks is 4.00%, following a 0.25% cut on August 7, 2025. This is the main policy rate for sterling loans and deposits, directly affecting borrowing costs for banks and consumers in the UK. The Bank of England cut its base interest rate from 4.25% to 4.00% in August 2025 for several key reasons: Economic Growth Concerns: The UK economy showed signs of slowing, with sluggish economic growth and a recent contraction in GDP (0.1% month-over-month in May 2025). The Bank anticipates modest growth ahead but overall economic momentum remains weak. Labor Market Weakness: There are emerging signs of a weakening labor market, including a decline in job vacancies and an increase in unemployment. This is expected to reduce upward pressure on inflation in the medium term. Inflation Above Target but Easing: Inflation remains above the 2% target, at around 3.5%, partly due to higher energy and food prices. However, inflation is slowly coming down from peak levels, and the Bank expects this disinflation trend to continue gradually. Balancing Act: The Monetary Policy Committee (MPC) was divided, requiring two rounds of voting to reach a narrow 5-4 majority in favor of the rate cut. The decision reflects a balance between tackling persistent inflation and supporting a weakening economy. Gradual and Careful Approach: The Bank emphasized a measured and cautious approach to further rate cuts, signaling that future reductions will depend on economic data and inflation developments. The rate cut aims to ease borrowing costs and support economic activity without risking a surge in inflation. Impact on Borrowers and Savers: The cut is expected to reduce mortgage payments for some households but may result in lower returns for savers. In short, the Bank of England’s rate cut in August 2025 was driven by concerns about slow economic growth and a fragile labor market, alongside a belief that inflationary pressures are gradually easing, allowing for a cautious loosening of monetary policy to support the economy. The Federal Open Market Committee (FOMC) decided to keep the interest rates unchanged in August 2025, maintaining the target range for the federal funds rate at 4.25%–4.50%. The main reasons behind this decision include: Moderation in Economic Activity: Recent data showed a moderation in economic growth during the first half of 2025, contrasting prior assessments that growth was proceeding at a solid pace. Labor Market Strength: Despite some slowing, the labor market remains robust with low unemployment rates, supporting continued economic resilience. Inflation Remains Elevated: Inflation is somewhat above the Fed's 2% target, with uncertainties about its persistence. Uncertainty and Risks: The FOMC remains cautious due to ongoing uncertainties, including effects from trade tensions and tariff policies, which could undermine progress toward inflation goals. Data-Dependent Approach: The Committee emphasized a wait-and-see approach, signaling that future rate changes will depend on incoming data and the evolving economic outlook. Dissenting Opinions: Notably, two governors dissented in favor of a rate cut, reflecting differing views within the Committee on the pace of easing. Overall, the Fed chose to maintain the current rates to balance inflation control with supporting economic stability, while staying flexible to adjust according to new developments trading is probabilty, manage your risk