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.

The Pound Sterling surges above 1.3250 against the US Dollar following the Fed’s large rate cut and expectations of further policy easing. Investors focus on the BoE policy meeting, with markets expecting the UK central bank to leave interest rates unchanged at 5%.