(Reuters) – Gilt yields and British bank stocks jumped after Thursday’s unexpectedly increased policy rate of 15 basis points by the Bank of England in response to rising inflation pressures in Britain.

British government bonds known as gilts yielded higher yields than ever before. They rose six-eight basis point on the day and reached their highest levels in two weeks.

At 23.6 bps, the yield curve for 10-year and two-year bonds has narrowed to its flattest point since October 2020.

The traders backed off their wagers about future rate increases and now expect roughly 15bps of such hikes at Bank of England’s February meeting. This is down from 23bps just before the decision.

Sterling rose as high as 0.8% against the U.S. Dollar at $1.3366, and soared to 0.7% against the Euro at 84.55pence.

The Bank index rose almost 4% due to rate-sensitive banks.

However, reaction to the wider equity indexes were less positive due to the international exposed decreasing gains by 1% per day in response the rise of sterling.