BoE Interest Rate Decision: BoE leaves interest rates on hold, as expected

The BoE voted to leave rates unchanged at 3.75% for a third consecutive meeting, in line with expectations. The vote split was 8-1, in line with expectations, as policymakers say they stand ready to act if needed. Interestingly, even some of the more hawkish members voted to hold, with just Huw Pill voting to hike rates.

The BoE raised its inflation forecast for 2026 at 3.3% to 4.5% under a range of scenarios (up from 2.2%). The central bank also lowered its growth forecast for 2026 to 0.7%-0.8% (from 0.9% previously). These projections and the BoE’s wait-and-see stance highlight the level of uncertainty rather than marking a significant hawkish shift.  

The market is pricing in over 67 basis points of rate hikes by the end of the year, which is approximately in line with pre-meeting expectations. 

The market reaction was muddied by Japanese authorities stepping in to support the yen prior to the BoE decision, weakening the USD.

GBP VS DOLLAR (GBP/USD):

If we take a closer look at the technicals, we can observe how the price was trading +0.3 at 1.3515 before the announcements, and post the decision, GBP/USD remained unchanged at 1.3515. On the four-hour chart, GBP/USD bounced from the 1.3450 support, rising above the 50 SMA, with buyers looking towards 1.36, the April high.

FTSE 100 (UK100):

The FTSE 100 is moving sharply higher, but this is related to the weaker USD rather than the rate decision. Before the announcement, the price was trading around 10,330, and currently, it is trading +1.3% at 10,345. The FTSE is breaking out above its falling trendline, testing the 200 SMA at 10,350. A rise above this key resistance could see buyers gain traction.

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