GBPUSD GBP/USDOANDA:GBPUSDShavyfxhubBank of England (BoE) Bank Rate Current Rate: 4.25% ,the 10 year bond yield GB10Y =4.632% The BoE reduced its base rate from 4.50% to 4.25% in May 2025 and has maintained it at 4.25% since then (including the June 19, 2025 meeting). The Monetary Policy Committee (MPC) has signaled a likely gradual easing path with expectations of a 25 basis point cut possibly at the August 7, 2025 meeting, potentially bringing the rate down to around 4.00%. The BoE’s decision reflects easing inflation pressures as inflation stands at 3.4% but remains cautious due to ongoing economic uncertainties and inflation still above target. Federal Reserve (Fed) Funds Rate Current Rate: Approximately 4.50%-4.25% (mid-2025 consensus) The united state 10 year government bond yield US10Y=4.407% The Fed has held rates steady at around 4.50% -4.25%, with markets expecting a cautious approach to rate cuts amid inflation concerns and economic data. The Fed’s policy remains more restrictive compared to the BoE, though some easing is anticipated later in 2025 depending on inflation and growth. Context bond yield differential GB10Y-US10Y=4.632%-4.407%= 0.225% advantage for carry traders in favour GBP. Interest rate differential GBP IRT-USD IRT= 4.25%-4.5%=-0.25% ,The Fed rate is about 0.25 percentage points higher than the BoE rate, giving a slight interest rate advantage to the USD over GBP at the short-term policy rate level. Carry Trade Impact The carry trade involves borrowing in a currency with a lower interest rate and investing in a currency with a higher rate to earn the spread. Despite the Fed’s slightly higher policy rate, the BoE’s historically higher rates earlier in 2025 and expectations of a slower pace of Fed cuts have supported GBP carry trades. The interest rate differential is relatively narrow, so carry trade flows are moderate but still contribute to demand for GBP assets. The bond yield differential slightly favors GBP at 4.632% gb10y as against USD 4.407% , attracting fixed-income capital to uk treasury giving gbp short term advantage. #GBPUSD