The pound is getting smashed after the Bank of England cut interest rates

The pound has gone into freefall after the Bank of England (BoE) cut interest rates to 0.25%, down from 0.5 %.

It is the first time the Bank has lowered interest rates since 2009.

Sterling fell almost 1% immediately after the BoE's announcement at midday and is $1.3199 against the dollar as of 12:05 pm GMT.

The rate cut had been widely expected, which probably explains why the currency fall is not much worse. But the BoE does expect the weaker pound to increase inflation over the rest of the year and possibly beyond.

2016 has already been a rollercoaster year for the currency following the UK's June 23 vote to leave the EU, which saw the pound fall to thirty-year lows against the dollar.

It had since stabilised since Theresa May became Prime Minister and even rallied after the BoE surprised everyone by holding interest rates on June 14. But it is still just over 10% lower than before the referendum vote took place.

Here is how sterling looks at 12:05 pm GMT:

Investing.com

The FTSE 100, on the other hand, rose almost 1% as of 12:08 pm GMT:

Investing.com