Pound rises to its highest level since Brexit vote
The British pound has climbed to its highest overall level since the Brexit referendum over a decade ago, reaching 86.4 according to Bank of England data.
Stock photo for illustration only, not from the actual event
- The British pound has hit its highest level since the June 2016 Brexit referendum.
- The currency index against 18 main world currencies reached 86.4 per Bank of England figures.
- Traders cite improved political stability and solid economic growth as key drivers.
- The Bank of England's Monetary Policy Committee faces a major interest rate decision.
The British pound has climbed to its highest overall level since the Brexit referendum over a decade ago. Sterling has risen notably in recent weeks against both the euro and the US dollar, coming ahead of an anticipated increase in interest rates by the central bank.
The most-watched measure tracking the value of the British currency against a basket of 18 of the world's main currencies reached its joint highest level this week since the June 2016 referendum, based on official figures released by the Bank of England.
The value touched 86.4 on an index where a score of 100 equates to the baseline value recorded in 2005. The central bank is scheduled to officially confirm the calculation on Thursday. Historically, the value of sterling fell significantly following the June 2016 Brexit referendum, hitting further lows during the subsequent Brexit negotiations, the Covid-19 pandemic, and the 2022 mini-Budget.
Stock photo for illustration only, not from the actual event
The rebound of the British pound to pre-Brexit levels highlights a shifting perspective within global financial markets regarding the UK economy. Key factors such as reduced political friction and a thaw in relations with the European Union have helped alleviate the prolonged uncertainty that previously weighed on sterling. While a stronger currency aids consumers by curbing inflation and boosting purchasing power for imports, policymakers must carefully weigh its broader impacts on export competitiveness.
Several currency traders noted that the United Kingdom is being viewed through a different lens given its relative political stability, solid domestic growth, and ongoing diplomatic rapprochement with the European Union. Sterling has historically shown strong sensitivity to Brexit developments and political volatility over recent years.
A stronger pound serves to help rein in domestic inflation while increasing purchasing power for everyday consumers purchasing imported goods or taking holidays abroad. Although UK economic growth for the year has outperformed expectations, emerging indicators suggest that elevated energy and fuel prices have begun to weigh on overall consumer confidence.
The Bank of England's nine-member Monetary Policy Committee faces a crucial decision regarding interest rates on Thursday, with the market widely anticipating the first rate hike in three years. By Wednesday evening at 23:01 GMT, sterling was trading up 0.28% against the dollar at $1.3434, while remaining flat against the euro at €1.1996.
Source: BBC Business
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