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

BoE Dovishness Weighs on Pound, April Rate Cut Priced In

February 6, 2026, 12:01 PM174 words10 sourcesAI-Generated · Reviewed by editorial team
GBP/USD
BoE Dovishness Weighs on Pound, April Rate Cut Priced In

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The Bank of England (BoE) held interest rates steady at 3.75%, but a surprisingly dovish stance triggered a significant decline in the Pound Sterling (GBP). A 5-4 split within the Monetary Policy Committee (MPC), with four members voting for an immediate rate cut, signaled mounting pressure for easing as inflation nears its 2% target. Markets have now fully priced in a 25 basis point rate cut in April, with increasing expectations for a potential move as early as March, favored by ING. This shift in expectations has weakened GBP against the USD, with GBP/USD falling to around 1.3530, and also impacting pairs like GBP/JPY and EUR/GBP. Political risks in the UK, including upcoming elections, are adding to the downward pressure on the currency. While some market participants remain hesitant to fully price in two rate cuts this year due to political uncertainty, the consensus points towards a more accommodative monetary policy in the near term. The BoE projects inflation to hit its 2% target in Q1 2028 and economic growth of 0.9% in 2026.

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