Even though the BoE surprised everyone by raising rates by 0.5%, the British pound falls

Even though the rate hike was bigger than expected, it didn't do much for the sterling. GBP/USD fell more than 1% to $1.2690.

After the Bank of England raised interest rates by 0.5%, which was a surprise, the GBPUSD fell by more than 1%. Investors probably thought that the move would make them feel better about the pound. Instead, currency traders rushed to get out of the market because they thought that such a big boost might actually push the UK into a slump.

The value of the pound fell for the fifth time in six days, hitting a new low for the week at $1.2690 this morning. The UK currency, on the other hand, reacted very well to the rate hike at first. It jumped to a high it hadn't seen since late April. But the gains were quickly lost as the pair changed direction.

Most of the time, when the interest rate goes up, it's good for the local currency because it makes it more useful for return on deposits. On the other end of the scale, too much hiking could take away the economy's ability to grow and cause it to slow down quickly, which could lead to a recession.