The U.K. pound is up 0.7% to $1.3307, its highest level against the U.S. dollar since March 2022, as traders react to news that the Bank of England left its main bank rate unchanged at 5%.

On Wednesday, the Fed became the latest major central bank to reduce borrowing costs, cutting its main interest by half of a percentage point to roughly 4.8% from a two-decade high of 5.3%, where it had stood for 14 months. It also signaled that there will be more cuts to come in the next few months.

The British central bank has emphasized its intention to move steadily to ensure that inflation continues to slow.

The UK's benchmark stock indexes ended higher on Thursday, after the Bank of England kept rates on hold, as widely expected, and extended its bond reduction plan for another year. The blue-chip FTSE 100 was up 0.

European markets closed higher Thursday as investors digested the latest monetary policy decisions from the U.S. Federal Reserve and the Bank of England.