Business & Finance

Sterling Hits Highest Level Since 2016 Referendum, Bank of England Index Reaches 86.4

By Faisal Islam

The pound has risen to its highest overall level since the June 2016 Brexit referendum, according to Bank of England figures. In recent weeks, sterling has strengthened notably against the euro and the dollar, ahead of an anticipated increase in interest rates. The most closely watched measure of the British currency’s value against a basket of 18 major world currencies reached a joint highest level since the referendum, with the index value at 86.4 on a scale where 100 equals the 2005 value. The Bank will confirm the calculation officially on Thursday.

Sterling fell sharply after the 2016 referendum and reached further lows during the Brexit process, the COVID‑19 pandemic, and the 2022 mini‑Budget. Some traders noted that the UK is now viewed more favorably due to relative political stability, solid growth, and improved relations with the European Union. 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."

A stronger pound can help curb inflation and increase consumers’ purchasing power for imports and holidays. UK growth so far this year has outperformed expectations, although higher energy and fuel prices have begun to affect consumer confidence. The Bank’s nine‑member Monetary Policy Committee will make an important decision on interest rates on Thursday, with the first rate rise in three years widely expected.