BoE Decision Sparks Pound Drop Amid Interest Rate Uncertainty

The British Pound (GBP) dropped against its major peers after the Bank of England's (BoE) monetary policy decision. The BoE left interest rates unchanged at 3.75%, with a 6-3 majority voting to hold, which was slightly lower than expected.

The BoE warned that the energy shock would keep volatility surrounding economic growth elevated and could lead to second-round inflation shocks if it remains persistently high. Despite this, the central bank emphasized its commitment to keeping inflation on track to meet the 2% target in the medium term.

In related news, the US Dollar faced intense selling pressure in European trade, with investors doubting whether the Federal Reserve (Fed) will raise interest rates to combat hot inflation. The US Dollar Index (DXY) traded 0.15% lower at around 100.60, after giving back its early gains.