British Pound hits highest level against major currencies since Brexit vote

The British pound has climbed to its highest overall level against a basket of currencies since the Brexit referendum over a decade ago. Sterling rose notably in recent weeks against both the euro and the dollar ahead of an anticipated rise in interest rates by the central bank. The most-watched measure of the currency against 18 of the world's main currencies reached its joint highest level this week since the June 2016 referendum, based on figures from the Bank of England. The value hit 86.4 on an index where 100 equals the value in 2005, with the bank scheduled to officially confirm the calculation on Thursday. By Thursday at 04:15 GMT, the pound was up 0.13% against the dollar at $1.3495 and down 0.16% against the euro at €1.1979. Past values for sterling fell sharply following the June 2016 referendum, hitting further lows through the Brexit process, the Covid pandemic, and the 2022 mini-Budget. Traders pointed to relative political stability, solid growth, and a rapprochement with the European Union as reasons for the currency's rebound. Economist and former Treasury minister Jim O'Neill stated that he was not surprised, noting that people were underestimating the improving momentum in the UK. UK growth this year has beaten all forecasts, though higher energy and fuel prices are showing signs of hitting consumer confidence. The Bank of England's nine-member Monetary Policy Committee faces a key decision on interest rates, with the first rise in three years widely expected.

Context

A stronger currency generally helps lower the cost of imports and makes foreign travel cheaper for local consumers while also helping to control inflation. Central banks adjust interest rates to manage economic growth and keep price increases under control.