The BoE left interest rates and its asset purchase target unchanged amid concerns that a strong sterling is choking off an economic recovery.
The euro traded marginally stronger, with traders looking to a speech by ECB and minutes from the Fed meeting today.
The outlook for central bank policymaking dominated attention in major currency markets on Tuesday, with the dollar rally already fading.
German industrial output fell 1.8 percent on the month in May, its biggest drop in more than two years, surprising most analysts.
The dollar struggled to make more headway after a jump in U.S. job creation left stock markets in optimistic mood.
The dollar was broadly bid on Thursday by a stronger-than-expected U.S. nonfarm payrolls report for June.
The report boded well for Thursday's U.S. nonfarm payrolls report, and provided a boost to the dollar.
A UK factory survey adds to evidence that Britain's consumer-led recovery is becoming more balanced and sustainable.
The euro held near a six-week high against the dollar on Tuesday, threatening a break past $1.37.
The dollar looked set for a second week of losses on Friday, after a string of poor U.S. economic data that gave investors no reason to expect higher interest rates soon.
Sterling rallied on Thursday after new measures to cool the UK housing market failed to dampen rate rise expectations.
The pound saw losses after comments from the BoE cooled expectations for an interest rate hike, while its G3 counterparts drifted in well-worn ranges.
The British pound fell after the Bank of England did little to bolster rate hike expectations.
The Australian and New Zealand dollars both jumped on Monday, after a promising China manufacturing survey.
The dollar reversed some of its losses in a quiet session overnight after upbeat U.S. data helped temper the Federal Reserve's dovish outlook.
The dollar sank to its weakest level in three weeks on Thursday after a cautious message from the Federal Reserve.
Currency experts have warned that there will be winners and losers in the foreign exchange markets on the back of the spike in oil.
Currency analysts to believe an interesting trading opportunity could develop over the coming months.
The U.S. dollar held onto modest gains, having risen broadly after U.S. consumer prices recorded their largest increase in more than a year in May.
The Australian dollar fell more than half a percent against the U.S. dollar on Tuesday after the RBA expressed economic recovery doubts.