BoE rate increase

Hi guys,

Im completely new to the FX game, so excuse the basic qu's......

1) Under "read" on the economic calendar it reads:

<FIELDSET class=smallfont style="PADDING-RIGHT: 10px; PADDING-LEFT: 10px; MARGIN-BOTTOM: 9px; PADDING-BOTTOM: 2px; WIDTH: 70%; PADDING-TOP: 4px"><LEGEND>Definition</LEGEND>

The central bank's governing body, the Bank of England (BOE) Monetary Policy Committee, releases an Interest Rate Statement each month. The statement contains the latest decision regarding changes to the nation's short term interest rate ("Bank rate"). A rising trend has a positive effect on the nation's currency. Short term interest rates are the paramount factor in currency valuation; traders look at most other indicators merely to predict how interest rates may change in the future. What makes interest rates so important is that high rates attract foreigners looking for the best "risk-free" return on their money, which significantly increases demand for the nation's currency. The primary objective of the central bank is to achieve price stability; when inflation rises above an annualized rate of approximately 2%, they will respond by raising interest rates in an attempt to bring prices down. This is what makes inflation-predicting indicators so important. Traders know that rising prices will lead the central bank to raise interest rates, which ultimately leads to a more valuable currency.

</FIELDSET>From this, i would assume that increased interest rates make the currency stronger. My question is why did the GBP/USD drop when announced??
Surely a stronger GBP would mean more USD's for your money??

Though the BoE did raise rates, their statement has been interpreted by traders as being 'soft'. Meaning that the chanc eof further rate increases has diminished. The rate increase was already priced into the market so it would have taken a stronger statement to have pushed this pair higher.
Oft times this is how it works with these types of events.

Thanx MRGREEN,

In future, what would be the best way for me to find out which way big announcements are going to send the market??

Vik if you check out {Link removed, see rule #2}
Click on Trader Toolz, there is a "Live Commentary"
If you were to refresh that commentary page after the news comes out, you will see the results printed on that page.

Theres actually also alot of handy trader toolz that I use daily on that site.
Its invaluable.

Good luck.