The pound soared after the Bank of England held interest rates

The pound soared over 2% on the news that the Bank of England is holding interest rates at 0.5% for the 88th straight month.

Many in the markets had expected the BoE to cut interest rates to 0.25% in response to the June 23 Brexit vote, which governor Mark Carney previously warned will provide a substantial drag on the British economy.

The BoE’s lack of action on rates was a big surprise, as such a move had been widely expected in the markets, with a survey in the Financial Times on Monday suggesting that markets had “already priced in a 75% chance of interest rates being cut from 0.5% to 0.25% this week.”

This, in turn pushed sterling massively higher, and just after 12:00 p.m. BST (7:00 a.m. ET) it approached $1.3384, its highest level since the final day of June. The pound then pulled back a little from those highs, and settled at roughly $1.335, a gain of 1.5% on the day

Here is how sterling looked at 4:50 p.m. BST (11:50 a.m. ET):

The pound crashed after Britons voted to leave the EU, losing more than 10% of its value in a couple of trading sessions, and dropping down to the lowest level since 1985. It has since rallied a little, thanks largely to the increased political stability brought about by the appointment of former home secretary Theresa May as prime minister, and has now jumped even further on the BoE’s inaction.

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