BoE and ECB Hold Rates as Dollar Keeps Short-Term Edge

The Bank of England kept rates at 3.75%, but the close 5–4 vote showed policymakers are split, keeping future rate cuts on the table. The pound weakened after the decision as markets priced more easing ahead. At the same time, the U.S. dollar stayed supported as the Fed remains cautious about cutting rates due to sticky inflation.

Technically, GBP/USD has dropped from 1.3870 and is now testing support around 1.36. Price came back from the 61.8% Fibonacci level of the recent upward swing. If this level breaks, the downside could extend toward 1.34 and possibly 1.32. If support holds, the pair could recover toward 1.37 and then 1.3870 again.

GBP/USD Daily Chart

The European Central Bank also held rates at 2%. The message was balanced, with inflation seen moving toward the target but with uncertainty still high. Lagarde signalled a wait-and-see approach, leaving markets unsure about the timing of future cuts.

Technically, EUR/USD is testing 1.18 support. Holding above this could allow a move toward 1.1870, then 1.20 and 1.2085. A break lower could open 1.17, then 1.16.

EUR/USD Daily Chart

From a market view, this supports the U.S. dollar in the short term. GBP/USD stays under pressure as markets expect BoE cuts later this year. EUR/USD is more stable, but upside may stay limited unless U.S. data weakens.

Conclusion

Both central banks held rates as expected, but tone matters. The BoE looks slightly closer to cutting, which is negative for the pound. The ECB looks cautious but stable. With the Fed still restrictive, the U.S. dollar keeps a small advantage, keeping downside risk in GBP/USD and a slightly bearish bias for EUR/USD.