Relative political stability and stronger-than-expected economic expansion have helped drive sterling to levels unseen across major currencies since mid-2016. In recent weeks, the currency has logged significant gains against both the dollar and the euro as financial markets anticipate an impending policy shift. However, consumer confidence is facing headwinds from elevated energy and fuel costs. The Bank of England is scheduled to confirm these currency index figures alongside an anticipated policy decision.
Key points
A stronger currency provides a buffer against persistent inflation while lowering import…: A stronger currency provides a buffer against persistent inflation while lowering import and overseas travel expenses for domestic consumers.
Improved relations with the European Union and renewed political stability have played cr…: Improved relations with the European Union and renewed political stability have played crucial roles in reviving investor sentiment toward the UK.
Persistent energy and fuel expenses continue to strain consumer confidence despite broade…: Persistent energy and fuel expenses continue to strain consumer confidence despite broader economic growth outpacing initial projections this year.
Sources checked by our analysis pipeline: 1
- Published
The pound has risen to its highest overall level since the Brexit referendum over a decade ago.
Sterling has risen notably in recent weeks against the euro and the dollar, ahead of an expected rise in interest rates.
The most-watched measure of the value of the British currency against a basket of 18 of the world's main currencies this week reached its joint highest level since the June 2016 referendum, according to Bank of England figures.
The value reached 86.4 on an index where 100 equals the value in 2005. The Bank will officially confirm the calculation on Thursday.
The value of sterling fell significantly after the Brexit referendum in June 2016, and reached further lows during the Brexit process, the Covid pandemic and the 2022 mini-Budget.
Some traders said the UK was being seen in a different light given relative political stability, solid growth and the rapprochement with the European Union.
Sterling has responded strongly to Brexit developments and political uncertainty in recent years.
Jim O'Neill, an economist and former Treasury minister, said: "I'm not surprised. People…
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