The British pound strengthened on currency markets after the Bank of England increased its benchmark interest rate by 0.25%. This move, aimed at curbing inflationary pressures, has boosted investor confidence in the UK economy.

Analysts suggest the rate hike signals the Bank of England’s commitment to maintaining price stability, making sterling a more attractive investment. The immediate impact was a rise against both the US dollar and the euro.

However, some economists caution that further rate increases could negatively impact economic growth by increasing borrowing costs for businesses and consumers. The long-term effects on the UK economy remain to be seen.