The pound has risen 0.6pc against the dollar after hitting two-year highs last night when the US Federal Reserve announced its first rate cut in four years by half a percentage point.
Following last month’s cut, the average Standard Variable Rate (SVR) fell below 8pc for the first time since August 2023, down from 8.18pc in March, according to financial analysts Moneyfacts.
Since March this year, the average two and five-year fixes have fallen from 5.76pc and 5.34pc to 5.56pc and 5.2pc. On a ten-year fix, the average rate has fallen from nearly 6pc in March to 5.63pc, as lenders pass on Bank Rate cuts.
It comes after the Federal Reserve, which decides the central interest rate for the US, slashed its rate for the first time in four years, cutting it by half a percentage point on Wednesday night.
The “dot plot” published by the central bank also indicated that interest rates could be cut by another half a percentage point before the end of the year.
This would come after the US election on November 5, where voters will decide between Democrat Kamala Harris and former President Donald Trump.
Inflation in the UK remained sticky for August at 2.2pc, according to the Office for National Statistics, close to the 2pc target. This was unchanged from July, despite a significant increase in airfares in Europe, which could have pushed up the rate.