The government is due to announce possible changes to social restrictions on Sunday. A spokesman said that Prime Minister Boris Johnson would announce a very limited easing of lockdown measures.
In what it called an illustrative scenario, the BoE forecast Britain's biggest economic slump in over 300 years in 2020, with a 14% contraction in growth, then a 15% bounceback in 2021.
The pound strengthened to as much as $1.2418 after the announcement, but steadily declined from around 1100 GMT, reaching a low of $1.2266. Sterling was last at $1.2274, falling below $1.23 for the first time in two weeks, down 0.6% since New York's close.
Against the euro, which also saw a brief post-BoE rally, it was last at 87.78 pence, down around 0.4%. The central bank's Monetary Policy Committee kept the Bank Rate at its all-time low of 0.1% and left its target for bond-buying, most of it British government debt, at 645 billion pounds ($797 billion).