Bank of England (BoE) Monetary Policy & GBP💱 Forex•GBP/USD

BoE Dovish Shift Weighs on Pound, Rate Cut Bets Rise

February 7, 2026, 12:01 AM155 words10 sourcesAI-Generated · Reviewed by editorial team
GBP/USD
BoE Dovish Shift Weighs on Pound, Rate Cut Bets Rise

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The Bank of England (BoE) surprised markets with a notably dovish stance, voting 5-4 to hold interest rates steady at 3.75% while signaling a potential easing cycle. This decision, coupled with comments from BoE’s Pill warning against complacency regarding falling inflation, has significantly increased market expectations for a rate cut as early as March, with swaps markets now pricing in a nearly 70% probability. The dovish pivot stems from concerns about structural inflationary pressures and a desire to avoid overly accommodative monetary policy. Several analysts, including those at ING, now favor a March cut, while others anticipate easing in the second quarter. The Pound has weakened considerably, breaking its 200-day moving average, and EUR/GBP has risen to a high of 0.8721. Political risks in the UK are exacerbating the downward pressure on the currency. Despite the shift, some believe political considerations may delay the easing cycle. The GBP/USD pair has declined, testing the 1.3430 level.

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