The Bank of England cut its benchmark rate by 25 basis points today, but the decision revealed a more divided committee than expected. The final vote was 5–4 in favor of the cut, a more hawkish outcome than the 7–2 split anticipated by markets.
In a rare move, the MPC required a second round of voting to reach a decision. The initial vote saw four members favor a 25 bp cut, four vote for no change, and one member—BoE’s Taylor—supporting a 50 bp cut. Taylor ultimately shifted his vote to 25 bps in the second round, giving the majority needed to implement the reduction.
Governor Andrew Bailey reiterated that while inflation and growth risks remain elevated, the rate path has become more uncertain. He emphasized that policy is still restrictive, and warned against cutting too quickly or too deeply. Bailey also pointed to softer-than-expected pay growth in May and signs that businesses are delaying investment decisions.
Deputy Governor Ramsden acknowledged that the persistence of UK inflation has surprised the MPC, noting the role of supply-side constraints and highlighting a wide 2–4% estimate range for the UK’s neutral rate. Other officials echoed concerns about weak activity growth, and downplayed the idea that rising borrowing costs reflect doubts about the BoE’s credibility.
Bailey dismissed recession fears, stating that his outlook hasn’t changed much since May, and clarified that the recent upward revision to 2025 GDP was driven by new data, not a shift in the committee’s broader economic view.
Technically, the GBPUSD extended its bullish momentum today, breaking decisively above the 38.2% retracement of the July 1–August 1 decline at 1.33865 and clearing a key swing area between 1.33607 and 1.3378 (highlighted by green circles on the chart). That zone, previously acting as resistance, has now turned into support following the Bank of England decision. The pair is also moving firmly above its 100-day moving average, currently at 1.33535, marking a significant shift in the near-term technical bias.
This breakout above multiple key levels — the 100-day MA, the swing area, and the 38.2% retracement — confirms a bullish technical reversal after a persistent downtrend since early July. The next major target lies at the 50% midpoint of the July–August move at 1.3463, which sits within a broader resistance zone between 1.3451 and 1.3467. A break and hold above this area would further strengthen the bullish outlook.
Taking a broader look at the daily chart below, the trend for the year before the recent decline from the July 1 high, has been to the upside. The price bottomed in January, and trended higher into July. The more recent price decline below the 100-day moving average put that trend into question, but the low price on the move to the downside since the July 1 high could not reach the 38.2% retracement of the longer term move up from January low.
That failure to extend below the 38.2% retracement kept the buyers in the long-term more in control and in play. The break back above the 100-day moving average yesterday and the run higher today solidified the buyers control
