BoE's Shock 5-4 Vote Puts GBP on Notice

Kevin Morgan

Central Bank

Data Interpretation

Daily News

Remarks of Officials

Forex

Economic

Summary:

A close 5-4 BoE vote for a rate hold signals future cuts despite strong PMI data and dovish forecasts.

The Bank of England (BoE) has held its key interest rate steady at 3.75%, but a surprisingly close 5-4 vote has signaled a dovish shift, increasing the likelihood of future rate cuts.

While the decision to maintain the Bank Rate was expected, the narrow margin suggests the Monetary Policy Committee (MPC) is more divided than anticipated. This development has raised market expectations for a rate cut as early as March, though the final outcome will depend heavily on two upcoming labor market reports and inflation prints.

A Surprisingly Divided Monetary Policy Committee

Four members of the committee dissented from the decision, voting instead to lower rates. The dissenters were Dhingra, Taylor, Ramsden, and Breeden.

The votes from Ramsden and Breeden were particularly noteworthy, as recent economic data had, if anything, pointed toward a more hawkish stance since the December meeting. Both members cited new analysis in the latest monetary policy report as a key factor in their decision, highlighting that structural changes in wage-setting are no longer expected to add significant inflationary pressure.

BoE Forecasts Weaker Growth and Slower Inflation

The Bank of England's new monetary policy report paints a distinctly more dovish picture of the UK economy. Compared to its November projections, the BoE now anticipates lower GDP growth, higher unemployment, and softer inflation.

Key forecast revisions include:

• CPI Inflation: Now projected to be 1.7% in the first quarter of 2027, down from the previous forecast of 2.2%.

• Annual GDP Growth: Revised downward by 0.3 percentage points to 1.2%.

Contrasting Signals from Recent Economic Data

This cautious outlook from the BoE contrasts sharply with recent PMI data, which suggests a more robust economy. The composite PMI recently hit its highest level in three years, and price indices within the report indicate that inflationary pressures could be more sustained. Upcoming data will be crucial in clarifying which of these conflicting signals more accurately reflects the state of the UK economy.

Figure 1: Recent UK PMI data shows a strengthening economy, with the composite index at a three-year high, contrasting with the Bank of England's more cautious economic forecast.

Outlook for UK Rates and the British Pound

The timing of the next rate cut appears to rest heavily on Governor Andrew Bailey, who has indicated a readiness to ease policy. Bailey noted that the two cuts currently priced in by markets seem fair.

While the timing will ultimately hinge on incoming data, the bar for further cuts has likely been raised as the Bank Rate approaches neutral levels. A first rate cut is projected for April, with another potentially following in November.

In currency markets, the EUR/GBP pair traded higher following the announcement, supporting expectations for a weaker pound. The forecast for EUR/GBP is 0.89 over a 12-month horizon, driven by narrowing interest rate differentials, a relatively weaker growth outlook for the UK, and a positive correlation to a weaker U.S. dollar environment.

To stay updated on all economic events of today, please check out our Economic calendar

Risk Warnings and Disclaimers

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Kevin Du

Political

Cryptocurrency

Daily News

Remarks of Officials

Economic

Bitcoin's price has dropped below the $71,000 mark, wiping out all gains accumulated since President Donald Trump's 2024 re-election. The leading cryptocurrency plunged over 7% on Thursday, extending a sharp decline that began in mid-January.

As of 04:30 GMT, Bitcoin was trading around $70,900. This latest slide brings the digital asset's total loss to nearly 20% since the start of the year.

From All-Time Highs to a Steep Correction

The current downturn follows a period of extreme volatility. Bitcoin first crossed the $100,000 threshold in December 2024 and revisited that price point in both February and May 2025. However, the asset has been on a largely downward trajectory since hitting an all-time high of more than $127,000 in October.

The earlier bull run was fueled by President Trump's re-election, which sparked market expectations for a lighter touch on digital asset regulation after years of government crackdowns.

Regulatory Hurdles and Political Scrutiny

During his campaign, Trump pledged to make the U.S. the world's cryptocurrency capital. Before winning the vote, he and his sons launched their own crypto firm, World Liberty Financial. Shortly after taking office, the administration announced plans for a strategic crypto reserve that would include Bitcoin and four other cryptocurrencies.

Despite these pro-crypto signals, a Trump-backed bill to regulate cryptocurrency trading has stalled in the U.S. Senate. Disagreements between traditional banks and crypto firms have created a legislative deadlock, casting a shadow of uncertainty over the industry.

Adding to market jitters, Democratic lawmaker Ro Khanna announced on Wednesday that he would investigate World Liberty Financial. The move followed a report from The Wall Street Journal stating that representatives of an Abu Dhabi official had signed a $500 million deal to acquire a 49 percent stake in Trump's new crypto venture.

Broader Markets Feel the Pressure

The negative sentiment was not confined to crypto. Equities and commodities markets also posted significant losses on Thursday, indicating a wider risk-off mood among investors.

• Silver: Dropped by as much as 16%.

• Hong Kong Stocks: The benchmark index fell by approximately 1.3%.

• Japanese Stocks: The benchmark index declined by about 0.7%.

To stay updated on all economic events of today, please check out our Economic calendar

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Isaac Bennett

Political

Remarks of Officials

A diplomatic dispute has erupted between the United States and Poland after the U.S. ambassador in Warsaw, Tom Rose, announced he was cutting off all contact with Poland's parliament speaker. The move followed the speaker's public criticism of Donald Trump and his refusal to support a Nobel Peace Prize nomination for the former president.

The sharp exchange, which played out on the social media platform X, prompted a direct response from Polish Prime Minister Donald Tusk and exposed deep political divisions within Poland over its relationship with Washington.

The Spark: A Nobel Nomination Rejected

The conflict began on Monday when Parliament Speaker Wlodzimierz Czarzasty declared he would not back an initiative to nominate Donald Trump for the 2026 Nobel Peace Prize. The proposal, spearheaded by U.S. House Speaker Mike Johnson and Israeli Knesset Speaker Amir Ohana, cited Trump's efforts to foster peace in the Middle East.

Czarzasty, who leads The Left party in Poland's ruling coalition, was unequivocal in his opposition.

"In my opinion, President Trump is destabilising the situation in these (international) organisations by representing the politics of force and using force to pursue a transactional policy," he told journalists. "All of this means that I will not support President Trump's Nobel Prize nomination because he doesn't deserve it."

Ambassador Responds with a Diplomatic Freeze

On Thursday, Ambassador Rose issued a furious public rebuke, stating that Washington would cease all engagement with the speaker.

"Effective immediately, the United States will have no further dealings, contacts, or communications with Mr. Czarzasty," Rose wrote on X. He accused the speaker of directing "outrageous and unprovoked insults" at Trump, calling him "a serious impediment to our excellent relations with Prime Minister Tusk and his government."

Rose added: "We will not permit anyone to harm U.S.–Polish relations, nor disrespect (Trump) who has done so much for Poland and the Polish people."

In his own post on X, Czarzasty said he regretted the ambassador's reaction but affirmed he would not change his position on fundamental issues.

Tusk Fires Back, Exposing a Political Rift

The ambassador's statement drew a pointed reply from Polish Prime Minister Donald Tusk, who pushed back against the American envoy's tone.

"Mr. Ambassador Rose, allies should respect, not lecture, each other. At least this is how we here in Poland understand partnership," Tusk wrote.

The incident also highlighted the starkly different approaches to the U.S. between Tusk's pro-European government and Poland's nationalist opposition, which is more aligned with Trump's "Make America Great Again" movement.

Rafal Leskiewicz, a spokesman for Polish President Karol Nawrocki, sided with the U.S. ambassador, telling the PAP news agency that the speaker's comments were a mistake. "The current ruling coalition chose as parliamentary speaker a man who does not understand the importance and significance of alliances," Leskiewicz said.

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James Riley

Political

Remarks of Officials

Economic

Politics in Haiti has become a lethal game. The country's last elected president, Jovenel Moïse, was assassinated by mercenaries in 2021, plunging the nation into a spiral of extreme gang violence. Since then, thousands have been killed or abducted as criminals seized control of roughly 90% of the capital, Port-au-Prince, bringing legitimate economic activity to a standstill.

Now, a new crisis looms as the country faces the prospect of having no government at all. The Transitional Presidential Council (TPC), established to steer the nation, was scheduled to dissolve on February 7, but vicious infighting has erupted over who will hold power next. This internal conflict not only threatens Haiti's future but also the fate of a planned United Nations security mission.

A Transitional Council in Turmoil

The TPC was formed in April 2024 out of negotiations led by the Caribbean Community (Caricom) after gangs physically prevented then-interim president Ariel Henri from returning to Haiti. With the parliament already dissolved in 2020, the council was meant to provide stability until new elections could be held. The original goal was to hold a vote in late 2025 and seat a new government by February 8, 2026.

That plan has completely unraveled. The TPC has been paralyzed by political maneuvering and efforts by its members to protect armed allies and secure resources. Its first prime minister, Gary Conille, was forced to resign after just six months.

More recently, several council members attempted a palace coup to oust Prime Minister Alix Didier Fils-Aimé while proposing a new, smaller council that would conveniently include them. The threat of council members mobilizing gangs to intimidate rivals and the international community is palpable.

The United States has responded by parking a warship and three coast guard cutters off the Haitian coast. It also imposed visa restrictions on five TPC members. In late January, US Secretary of State Marco Rubio stated he had spoken with Fils-Aimé, emphasizing "the importance of his continued tenure" to fight "terrorist gangs and stabilize the island." Rubio added that the TPC "must be dissolved by February 7 without corrupt actors."

Gang Violence Strangles Elections and the Economy

The council’s failure to establish basic security has had devastating consequences. According to UN Secretary General António Guterres, 8,100 people were killed between January and November 2025 alone in the nation of 11 million—a 20% increase from 2024. Sexual violence has also surged.

This chaos has made holding credible elections impossible. The prevailing view is that any attempt to organize a vote would allow gangs to formally take over the government, whether through coercion, campaign support, or by running their own candidates. With the interim government's own future uncertain after February 8, even an updated plan for elections in late 2026 appears highly unrealistic.

The economic toll has been staggering. The World Bank estimates that by 2024, the crisis was costing Haiti nearly $10 billion a year in lost economic activity, with small and medium-sized enterprises hit particularly hard.

UN Mission at Risk Without a Stable Partner

The political vacuum directly jeopardizes a critical UN mission designed to deploy an 11,000-strong multinational Gang Suppression Force (GSF). The force's objective is to crack down on gang leaders and retake control of vital infrastructure like transportation hubs. However, such a mission cannot succeed without an effective and credible government partner in Haiti.

Even if a new governing authority is hastily assembled, it is unlikely to have broad support. For decades, a recurring pattern in Haiti has seen corrupt political and business figures who are shut out of power use their gang contacts to create chaos. This "street veto" effectively cripples any new government before it can begin its most urgent task: reforming Haiti's security and judicial systems.

A viable long-term solution requires more than just military action. It demands a complete overhaul of Haiti's police, military, and intelligence services, alongside a fair and efficient court system to deliver justice and accountability for the brutal crimes committed daily.

A Global Funding Crisis Looms

Compounding Haiti’s internal problems is a sharp decline in global development funding. With the US Agency for Development (USAID) abolished by the Donald Trump administration and subsequent aid cuts by the UK, Canada, and the EU, critical resources are drying up.

This funding shortfall could prove fatal. Programs essential for long-term stability—such as disarmament, demobilization, and reintegrating former gang members into society—will likely have scant resources. Without projects to rebuild communities and generate jobs, there is no legal alternative to a life of crime, and many will simply return to violence.

With traditional aid shrinking, new approaches are needed. This could include direct country donations to the UN trust fund for Haiti, closer collaboration between private philanthropies and development banks, and better leveraging of remittances from the Haitian diaspora. But these initiatives require coordination, likely through a major donors' conference for Haiti—an event no one has yet offered to host.

To stay updated on all economic events of today, please check out our Economic calendar

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Adam

Cryptocurrency

XRP falls out of bed

Since the beginning of 2026, XRP has grappled with intensified volatility, culminating in a sharp sell-off that has underscored the token’s sensitivity to macroeconomic pressures, leveraged positioning and evolving investor sentiment.

While XRP’s longer-term narrative - driven by adoption in cross-border payments and ongoing institutional interest - remains a touchstone for many holders, recent price action has been dominated by short-term dynamics that have amplified downside risk.

In the early weeks of the year, XRP had shown signs of tentative resilience. Following a recovery from late-2025 lows, the token had traded in a choppy but relatively stable range, bolstered by optimism around potential spot XRP exchange-traded products (ETPs) and signs of regulatory clarity in certain jurisdictions. These narratives helped underpin sentiment and encouraged longer-term investors to hold through bouts of market stress. However, this stability masked underlying vulnerabilities that emerged as broader financial conditions shifted.

The catalyst for the recent sell-off was rooted in a renewed risk-off rotation across cryptocurrencies. XRP, with its high-beta characteristics relative to established assets like Bitcoin, experienced disproportionate pressure as traders reduced leveraged positions and sought safer havens or liquid collateral.

Leverage dynamics played a significant role in intensifying the decline. In the weeks leading up to the downturn, derivatives data indicated that speculative long exposure in XRP had rebuilt as market participants positioned for continued momentum.

When prices failed to extend higher and instead breached key technical support levels, stop-loss orders were triggered and liquidations accelerated. The forced unwinding of leveraged longs drove selling pressure beyond what spot market orders alone would have produced, creating a feedback loop that pushed XRP sharply lower.

Institutional flows also reflected the shift in sentiment. Early 2026 had seen pauses in both inflows and outflows from XRP-linked investment products, suggesting selective allocation rather than broad conviction.

During the current sell-off, the absence of aggressive institutional dip-buying - particularly from larger asset managers - left XRP vulnerable to sustained downside pressure. In contrast to other asset classes where institutional players have sometimes acted as stabilising forces, capital flows in and out of XRP structures appeared cautious and tactical, reinforcing volatility rather than dampening it.

Sentiment specific to the XRP ecosystem contributed to the sharp move. While discussions about regulatory clarity and ETP access continue, tangible progress has been incremental rather than transformational. In the absence of clear, immediate catalysts for adoption or product launches, traders focused more heavily on macro indicators and short-term technical levels. This dynamic contributed to a lack of conviction at key price supports, making it easier for stop-losses to cascade and deepen the sell-off.

Looking ahead, XRP’s direction will likely hinge on whether broader market conditions continue to improve and whether institutional and retail confidence can rebuild without renewed liquidation pressure.

For now, the current sharp sell-off serves as a reminder that even assets with strong structural narratives remain vulnerable to shifts in sentiment, leverage unwinds and tactical positioning.

XRP bearish case:

While XRP remains below its late January low at $1.5082 on a daily chart closing basis, immediate downside pressure should remain dominant with the $1.4168 - $1.3495 support zone being eyed. It consists of the September-to-November 2021 highs and the 2025 trough.

Failure there may push the May 2021 low at $1.1008 to the fore.

XRP bullish case:

There currently is none! Only if XRP were to see a bullish reversal which would take the cryptocurrency above its $1.5082 late January low on a daily chart closing basis, could the early February high at $1.6778 be back on the map.

Short-term outlook:

Bearish while below the 31 January high at $1.5082, targeting the $1.4168 - $1.3495 region.

Medium-term outlook:

Bearish, targeting the $1.4168 - $1.3495 support area while below $1.5082.

XRP daily candlestick chart

Source: ig

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Adam

Forex

FUNDAMENTAL OVERVIEW

USD:

The US Dollar continues to rebound after the strong selloff experienced in the last couple of weeks of January. The greenback remains supported by improving US data and strong PMIs potentially hinting to stronger economic activity going forward. If the data continues to come out strong, traders will have to pare back their dovish Fed bets, and that’s going to boost the US Dollar further.

Next week is going to be a big one. In fact, we will get the US NFP report on Wednesday and the US CPI on Friday. The trend for the dollar is looking increasingly bullish, but traders will still look for confirmation from the data to gain more conviction.

JPY:

On the JPY side, nothing has changed. The BoJ held interest rates steady as expected at the last policy meeting and upgraded slightly growth and inflation forecasts due to the expansionary fiscal policies.

Governor Ueda didn’t offer anything new in terms of forward guidance as he just repeated that they will keep raising rates if the economic outlook is realised. He also added that April price behaviour will be a factor to mull over a rate hike. This suggests that April is when they expect to deliver another rate hike if the data supports such a move.

The Japanese Yen rallied just on the back of the “rate check” talks and intervention risks. This is now in the rear-view mirror and traders are piling back into shorts as the US Dollar strengthens on better data and expected Takaichi’s victory in the lower house elections this weekend.

USDJPY TECHNICAL ANALYSIS – DAILY TIMEFRAME

USDJPY - daily

On the daily chart, we can see that USDJPY continues to rally towards the 159.00 handle where we got the strong verbal intervention and the talks of “rate checks” that eventually triggered a huge and quick selloff in the pair. If the price gets there, we can expect the sellers to step in with a defined risk above the highs to position for a drop into the major trendline. The buyers, on the other hand, will look for a break higher to increase the bullish bets into new cycle highs.

USDJPY TECHNICAL ANALYSIS – 4 HOUR TIMEFRAME

USDJPY - 4 hour

On the 4 hour chart, we can see that the price broke above the last week’s gap and continued higher as the buyers increased the bullish bets into the 159.00 handle. There’s not much else we can glean from this timeframe, so we need to zoom in to see some more details.

USDJPY TECHNICAL ANALYSIS – 1 HOUR TIMEFRAME

USDJPY - 1 hour

On the 1 hour chart, we can see that we have a minor upward trendline defining the bullish momentum. The buyers will likely continue to lean on the trendline with a defined risk below it to keep pushing into new highs, while the sellers will look for a break lower to pile in for a pullback into the 155.50 support. The red lines define the average daily range for today.

Source: investinglive

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King Ten

Political

Remarks of Officials

Forex

Economic

U.S. Senator Elizabeth Warren is urging Treasury Secretary Scott Bessent to terminate a $20 billion currency swap line established with Argentina last year. As the leading Democrat on the Senate Banking Committee, Warren argues the financial backstop was a temporary measure that has now served its purpose.

In a letter sent Wednesday, Warren reminded Bessent that the Treasury had framed the agreement as a tool for "acute, short-term and urgent" economic needs. The original goal was to provide a bridge for Argentine President Javier Milei's government through critical October elections while it pursued economic reforms.

A Short-Term Fix or an Open-Ended Agreement?

Warren’s main concern is that the swap facility remains active, creating the possibility of continued use well beyond its initial scope.

"Despite Treasury's assertion that its use of the (Exchange Stabilization Fund) was for an 'acute, short-term and urgent' purpose, it appears—by leaving the (exchange stabilization arrangement) in place—to have left open the possibility of continued use of the ESF in Argentina well after the October 2025 elections," Warren wrote.

She contends that keeping the arrangement open contradicts the Treasury's original assurances to Congress.

How the Currency Swap Propped Up Argentina's Economy

The Treasury Department signed the currency swap agreement with Argentina just before a key midterm election, as concerns mounted over the country's economic stability.

The facility provided Argentina's central bank with crucial funds to support the value of the peso and stave off a potential devaluation ahead of the vote. The funds were deployed in October for two primary purposes:

• Repaying debt to the International Monetary Fund (IMF).

• Replenishing foreign currency reserves used to defend the peso's exchange rate.

The election ultimately saw President Javier Milei, a close ally of U.S. President Donald Trump, succeed in expanding his influence within the country's legislatures.

Treasury Faces Questions Over Swap Facility's Status

Warren noted that Secretary Bessent had previously told the committee that Argentina had already repaid its limited draw on the facility in full. She also mentioned that the Exchange Stabilization Fund (ESF) no longer holds any Argentine pesos.

However, there has been no official confirmation that the swap line itself is closed. Warren has requested written confirmation of its termination by February 12.

Bessent is scheduled to testify before the Senate Banking Committee on Thursday. Officials from Argentina's foreign and economy ministries did not provide an immediate response when asked for comment.

To stay updated on all economic events of today, please check out our Economic calendar

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