The sterling saw its biggest fall since the aftermath of June's Brexit vote on Thursday, while other major currencies most closely correlated with global growth rose after the Bank of England launched a series of steps to support the UK economy.
As well as cutting rates to a record-low 0.25% from 0.5%, the BoE launched two new schemes, one to buy £10 billion ($13.15 billion) of high-grade corporate bonds and another potentially worth up to £100 billion, to ensure banks keep lending even after the cut in interest rates.
Asian shares also joined a rise in global stock prices on Friday, news outlets reported.
Sterling sank 1.5% against the dollar in the half hour after the decision and as BoE Governor Mark Carney started speaking.
An overnight rally in crude oil prices also sharpened risk appetites, while sterling nursed deep losses after sliding on news of the BoE stimulus plan.
The BoE said it would take "whatever action is necessary" to achieve stability in the wake of Britain's vote to leave the European Union.
The BoE's quarter point rate cut to a record low 0.25% sent already low global bond yields even further down with British yields hitting record lows as gilt prices rose.
MSCI's broadest index of Asia-Pacific shares outside Japan rose 0.3%, headed for a 0.9% weekly gain. MSCI's world stocks index rose 0.3%.
Asia Wholly Positive
And the positive sentiment flowed through to Asia, where Tokyo ended the morning 0.1% higher, while Hong Kong added 1%, Sydney gained 0.4% and Seoul put on 0.5%.
There were also gains in Taipei and Wellington but Shanghai edged down 0.2%.
The Chinese yuan retreated on Friday, with onshore yuan in Shanghai quoted at 6.64 against the US dollar and offshore yuan in Hong Kong traded at 6.65 against the greenback.
The FTSE 100 closed up 105 points at 6,740.16, higher than the same day last year.
Australian shares gained 0.5% and South Korea's Kospi added 0.4%. Japan's Nikkei advanced 0.6%.
The dollar was effectively flat at 101.185 yen, on track to fall 0.8% on the week. The euro was steady at $1.11 after losing 0.7% on Thursday.
The dollar index was steady at 95.75 after gaining 0.3% on Thursday.
The Australian dollar hovered near a 3-week high of $0.76, awaiting the Reserve Bank of Australia's monetary policy statement due later in the day.
Outlook Remains Grim
"The Bank of England has hit a perfect 'High Five' at today's meeting, over-delivering against market expectations and bucking the recent trend of central banks disappointing," said Nick Gartside, a portfolio manager at JP Morgan Asset Management in London.
Ahead of the decision, currency traders had worried that those betting against the pound looked exposed to the risk that the bank would deliver only a cut in interest rates.
"By extending the quantitative easing program over the next 6 months, and the corporate bond buying program over the next 18 months, the MPC has indicated that it expects to be in easing mode for a good while," said Mike Amey, Head of Sterling Portfolios at PIMCO, an investment management firm.
Despite the extra stimulus from the BoE, IG market analyst Angus Nicholson said the outlook for the UK economy remains weak, providing further downside risks to the pound.
“Carney’s assessment of the post-Brexit UK economy was very negative, predicting the unemployment rate will rise from 4.9% to 5.5% over the next two years despite the new stimulus,” he wrote in his morning note.
Meanwhile, Carney said on Friday that Britain's economic problems today are not a repeat of the financial crisis and that Britons should not worry about the supply of credit.
"People should not worry about the supply of credit, this is not after the financial crisis, this isn't during the euro crisis—this is a modern financial sector that is working," Carney told LBC radio.
