An increase in the U.S. interest rate relative to the British interest rate will cause a(n):

Question

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When the U.S. interest rate increases relative to the British interest rate, it becomes more attractive for investors to hold dollars and invest in the U.S. This increases the demand for dollars and causes the value of the dollar to appreciate. On the other hand, the British pound becomes less attractive as investors can earn higher returns in the U.S. As a result, the demand for the pound decreases and its value depreciates. Therefore, an increase in the U.S. interest rate relative to the British interest rate will cause an appreciation of the dollar and a depreciation of the British pound.

An Increase in the U