The BOE surprised everyone with a 50 bps rate increase today, although market expectations were already split. While this move initially boosted the value of the pound, it has also caused some turbulence in the broader market.

The GBP/USD exchange rate climbed from 1.2780 to a peak of 1.2835 before stabilizing around 1.2800 shortly following the decision. However, it is now declining to 1.2750 during the day.

There are a few important points to keep in mind. Let’s examine them: