On February 6th, local time February 5th, the Bank of England announced its decision to maintain the benchmark interest rate at 3.75%, aligning with market expectations. The statement revealed that the Monetary Policy Committee reached this decision by a 5-4 majority vote, with four members voting in favor of a 25-basis-point rate cut. The Bank stated that the current monetary policy stance is aimed at ensuring inflation not only returns to the 2% target but also remains sustainably at that level in the medium term, which requires balancing risks during the process. The central bank noted that "based on current evidence, further rate cuts remain possible in the future," but simultaneously emphasized that decisions on whether and when to implement further easing will become increasingly difficult. The statement indicated that the extent and pace of any future monetary policy easing will depend on changes in the inflation outlook. Market institutions anticipate that the Bank of England may initiate a rate cut in April if the UK labor market shows further signs of slowing down. Expectations are for a total of four rate cuts in 2025, amounting to a cumulative reduction of 100 basis points.

Separately, the European Central Bank kept its three key interest rates unchanged, meeting market forecasts and marking the fifth consecutive meeting without policy changes. The deposit facility rate, main refinancing rate, and marginal lending rate were held steady at 2%, 2.15%, and 2.40% respectively. Following the rate decision, ECB President Christine Lagarde reiterated the policy stance during a press conference, noting that current eurozone growth is primarily driven by the services sector, especially information technology and communications, while manufacturing remains resilient amid trade headwinds, with businesses continuing to increase digital investment. A robust labor market continues to support household incomes. Lagarde emphasized the necessity of enhancing the eurozone's resilience against a backdrop of rising geopolitical uncertainties and a challenging external environment, urging governments to continue advancing structural reforms. She specifically highlighted significant pressure on the trade environment due to factors including rising tariffs and a stronger euro. Regarding the inflation outlook, Lagarde described it as "more unpredictable than usual" and noted that underlying inflation is currently consistent with the central bank's 2% target.

Key data to be watched today includes Germany's December seasonally adjusted industrial production month-on-month, Germany's December seasonally adjusted exports month-on-month, Canada's January employment change, and the preliminary US February University of Michigan Consumer Sentiment Index.

**USD Index** The US Dollar Index edged higher yesterday, testing the 98.00 level and hitting a fresh 9-day high. The index is currently trading around 97.90. Ongoing support from the nomination of a new Federal Reserve Chair provided some underpinning for the dollar. Additionally, the Bank of England's decision to hold rates while signaling a dovish stance also offered some support. However, a batch of generally soft US economic data released during the period limited the index's upward momentum. Focus today is on resistance near 98.50, with support seen around 97.50.

**EUR/USD** The euro declined slightly yesterday, closing the day with modest losses and currently trading near 1.1780. The primary factor weighing on the euro was the continued rebound in the US Dollar Index, which tested the 98.00 level. Furthermore, weaker-than-expected retail sales data from the eurozone also contributed to the pressure. Nonetheless, the European Central Bank's expected decision to stand pat limited the pair's downside. Attention today is on resistance around 1.1850, with support near 1.1700.

**GBP/USD** The British pound fell sharply yesterday, touching a 9-day low and currently trading around 1.3530. The currency was pressured by the sustained rebound in the US Dollar Index, which reached a 9-day high. The main driver behind the pound's decline, however, was the Bank of England's expected decision to maintain interest rates while emitting dovish signals, which rekindled market expectations for a rate cut within the year. Today, resistance is anticipated near 1.3600, while support lies around 1.3450.