Pound hits highest level since Brexit referendum a decade ago

Summarised from 4 outlets · 5 reports · Updated 5 Nov, 11:41 · Archive

Sterling has reached its strongest level against a basket of major currencies since the Brexit referendum in June 2016.

The pound has reached its highest overall level since the Brexit referendum in June 2016, according to Bank of England figures released on Thursday. The sterling effective exchange rate index, which measures the pound against a basket of 18 major world currencies, hit 86.4 on an index where 100 equals the pound's value in 2005. This is the joint highest level since the referendum.

The Guardian reports that the pound's strength follows a fall in the US dollar in the aftermath of the American midterm elections. However, the rise also reflects broader strength against other currencies including the euro and the yen. The pound has also benefited from expectations that the Bank of England will raise interest rates on Thursday, the first increase in more than three years, which makes investing in sterling more lucrative.

Sterling has climbed notably in recent weeks. Against the euro, the pound is worth 5.7 per cent more than a year ago, while it is worth 3.5 per cent more against the US dollar. The currency fell sharply after the 2016 Brexit referendum and suffered further losses during the Brexit process, the Covid pandemic and the 2022 mini-Budget crisis.

Jim O'Neill, an economist and former Treasury minister, said: "I'm not surprised. People were, and to a lesser extent, are, underestimating the improving momentum in the UK." The Guardian quotes Jim Reid of Deutsche Bank saying that investor relief at the absence of disputed American election results and prospects of divided government eased concerns about fiscal policy.

A stronger pound can help reduce inflation and increases buying power for consumers importing goods and travelling abroad. However, UK growth so far this year has outperformed forecasts, though there are signs that higher energy and fuel prices have begun to hit consumer confidence.

How it is being reported

• Pound at highest level since Brexit vote in 2016Some of the pound’s strength comes from the weakness of the dollar.Independent Business · 5 Nov, 14:13
• Pound at highest level since Brexit vote in 2016Some of the pound’s strength comes from the weakness of the dollar.Evening Standard · 5 Nov, 14:13
• Pound hits highest level since its crash after 2016 Brexit voteTen-year high shows sterling’s strength against other currencies following fall of dollar after US midterm elections Business live – latest updates The pound has hit its highest level since its crash in the wake of the Brexit referendum a decade ago. Data released by the Bank of England on Thursday showed that the pound reached its strongest level against a basket of other currencies since 23 June 2016 – the day of the EU vote – on Wednesday. Continue reading...Guardian World · 5 Nov, 11:14
• Pound reaches highest value since Brexit as interest rates set to riseA major index measuring sterling against overseas currencies has hit a ten-year high - but that could be tested quicklyIndependent Business · 5 Nov, 08:42
• Pound rises to its highest level since the Brexit referendumPound reaches highest level against a basket of currencies since the Brexit referendum a decade agoBBC Business · 4 Nov, 21:35

In this story: Bank of England · Sterling · United Kingdom · European Union · United States

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