BOE Cut Rates in 5-4 Split Vote, Trump’s Dovish Fed Pick

The Bank of England cut rates to 4% on Thursday in a narrow 5-4 vote, sending the pound higher and FTSE lower. The US dollar weakened on Friday after President Trump nominated Stephen Miran to fill the vacant Fed seat, reinforcing expectations for a more dovish tilt at the central bank. In Asia, Japanese equities rallied after Tokyo confirmed the US would amend overlapping tariffs, lifting the Topix index above 3,000.

Equities

The FTSE 100 fell 0.7% on Thursday after the Bank of England cut interest rates to 4%, but the narrow 5-4 vote raised concerns about how much further rates could fall from here. Sterling moved higher after the announcement, which added pressure to internationally exposed firms, while yields on two- and ten-year gilts also climbed.

Defence stocks were among the worst performers, with BAE Systems down 5.6% and Babcock falling 5.8%, tracking similar declines across European peers. Hikma Pharmaceuticals closed 7.1% lower after the company downgraded its margin outlook for its largest unit following its latest results.

Shell dropped 2.8% as lower oil prices weighed on energy shares, while InterContinental Hotels Group climbed 5.8% after reporting a rise in first-half profits. In the FTSE 250, Harbour Energy gained 8.9% after lifting its annual forecast.

In the US, the Dow fell 0.5% and the S&P 500 dipped 0.1% on Thursday, while the Nasdaq edged up 0.3% to close at a record high.

Eli Lilly dropped 14.1% after late-stage trial data for its oral weight-loss drug failed to meet investor expectations, despite the company raising its full-year guidance. Fortinet plunged 22% after the cybersecurity firm gave a revenue outlook that fell short of analyst forecasts. Intel closed 3.1% lower following public criticism from Donald Trump, who called for the resignation of CEO Lip-Bu Tan, citing ties to Chinese companies.

Apple, however, rose 3.2% after new tariffs on semiconductors spared firms manufacturing in or committed to investing in the US. The exemption appeared to shield larger US tech firms from the full impact of a 100% tariff announced by Trump on imported chips.

Forex & Commodities

The pound gained ground on Thursday after the Bank of England cut rates to 4% from 4.25%, but only after a 5-4 vote, which raised doubts about how many more cuts might follow. Sterling rose against the dollar, trading at $1.3440 on Friday morning. The narrow vote appeared to limit market expectations for additional easing, with investors now fully pricing in just one more rate cut by February next year.

On Thursday, Bloomberg cited that Federal Reserve Governor Christopher Waller was emerging as a leading candidate to become Fed Chair—a development that lifted the dollar. The dollar index rose by around 0.18% and the currency strengthened modestly versus the yen

However, on Friday morning, the tone shifted. Trump’s nomination of Stephen Miran, his economic adviser, as a temporary Fed Governor heightened expectations of a dovish turn in Fed policy and intensified speculation regarding future leadership.

Miran is seen as favouring lower interest rates, which added to speculation that Trump may also choose a similarly dovish candidate to replace Jerome Powell as Fed Chair when his term ends in May. This put downward pressure on the dollar, contributing to a weekly decline of approximately 0.7% in the dollar index as of writing.

Spot gold rose on Thursday to a two-week high, gaining 0.7% to close at $3,392 per ounce. The move followed the release of weaker US jobless claims data and the introduction of new US tariffs. The metal briefly reached its highest level since 23 July during the session. Silver also moved higher, reaching $38.11.

Oil prices continued to decline, with Brent crude settling at $66.43 per barrel on Thursday and WTI closing at $63.88. Both benchmarks fell for a sixth straight session. The market reacted to comments that US President Donald Trump would meet Russia’s President Vladimir Putin in the coming days. Over the last week, oil has dropped more than 9%, as OPEC+ confirmed plans to increase output by 547,000 barrels per day in September.