Sterling soared to its highest level in two and a half years against the US dollar after the Bank of England held its interest rate steady, diverging from the Federal Reserve’s substantial rate cut. V

Tight monetary policy coupled with a penny-pinching fiscal agenda usually results in currency appreciation, and sterling is surging on the prospect. But it's far from clear why the UK government or the Bank of England want a rising pound right now.

According to Scotiabank’s chief FX strategist Shaun Osborne; “A 1/4-point cut is likely to be accompanied by a dovish-leaning policy statement. A 1/2-point cut may see more measured forward-looking messaging.”