GBP hit by BoE vote surprise (again)

logo18year
Daily Market Report
Currency insight from
Excel Currencies
banner1

waterman

Written by Dan Waterman
February 6th 2026
All of a sudden the Pound is looking vulnerable..

It's just been one of those weeks where you get all the calls right as the trends and variables at play have moved the market in order of power.

In one week we have personally seen many;

- Clients buy USD at the best time in 4-and-a-half years;
- Clients buy Euros at the best time in 6-months 

And now both pairs are seen 2% & 1% lower from these recent highs.


Unfortunately this doesn't look much like a blip in the road either, as the foundations Sterling was building upon are showing real signs of cracking. Let's start with the Bank of England meet yesterday..

Interest rates were left unchanged at 3.75% as expected, but a twist in the voting (as we anticipated) caused GBP to fall a further 0.3% on release. A vote of 7-2 was expected, but a much closer 5-4 arrived, meaning the central bank look to be continuing on the 'one cut per quarter' path.

A lower interest rate, means a weaker currency, as yield opportunities for foreign investment into the country diminish (something the UK relies heavily on).

The BoE confirmed that disinflation is ahead of schedule and that inflation could hit the 2% target by April. This is significant news. With inflation seemingly tamed, they will turn their attention to economic growth and jobs and this will mean lower interest rates.

Political uncertainty surrounding all things Prime Minister Keir Starmer at the moment doesn't look like its going away and this again is bad news for GBP. A leadership challenge and who could replace him (likely left) is not what the markets want to see.

Then the current 'risk-off' mood from traders and investors which has seen a blood-bath in financial markets this week due to AI concerns. GBP is not looked at as a safe-haven currency and so again loses value in this kind of environment.

The post-Autumn Budget tailwind is over, the EU is stable and going about their business quietly, President Trump is taking a break from threatening everything and everyone and so the spotlight is on the UK/£ for a bit and it's not being looked at too favourably.

Roll on next week..