“A rare image of a circular rainbow has been taken from the window of a Thai Airways jet.
Rainbows are formed when sunlight strikes the curved inside of a raindrop at a specific angle and is reflected back through the water, creating a prism effect.
The apparent semicircle of a normal rainbow is only limited by the horizon. The full circle could be seen if the viewer were standing on a sufficiently high cliff, although it is more easily seen from aircraft.
Rainbows are long said to have had a profound religious and mythological significance. Before they were explained scientifically, they were described in the Bible as a symbol of God’s covenant with Noah, promising that mankind would never again be destroyed by flood.
In Irish folklore, the leprechaun hides his pot of gold at the end of a rainbow. This would, however, be harder to do in the case of a circular one.”
http://www.telegraph.co.uk/news/newstopics/howaboutthat/6264978/Circular-rainbow-seen-from-aircraft-window.html