Sterling has climbed to its strongest position against a range of major currencies since the Brexit referendum vote more than a decade ago, according to figures released by the Bank of England.
The latest data from the Bank revealed that on Wednesday, the pound reached its highest level against a basket of 18 other currencies since 23 June 2016, when Britain went to the polls to decide whether to remain in the European Union.
Sterling nosedived in the wake of the vote to leave the EU in 2016, plummeting to a 31-year low against the dollar in the immediate aftermath.
It has faced further turbulence in subsequent years, battered by Covid, the 2022 mini-budget crisis and a succession of elections.
The pound had received a boost ahead of the Bank of England’s interest rate decision on Thursday, with markets anticipating a rise to 4% — its first increase in more than three years.
Although sterling dipped 0.1% to 1.346 dollars shortly after the rate rise was confirmed, it had surged by half a cent against the greenback on Wednesday.
The pound remained broadly unchanged against the euro following the rate announcement, holding at 1.20 euros, though it climbed last month to its highest point against the single currency in 18 months.
Part of sterling’s newfound strength can be attributed to weakness in the dollar, which has been dragged lower by the midterm election results and the Democrats’ victory, while the euro has also faced headwinds amid mounting concerns over France’s fiscal position. The Bank published the sterling data on Thursday via its sterling effective exchange rate index (EERI), which monitors the pound’s performance against a basket of global currencies.
The figures revealed the index climbed to 86.4 on Wednesday, compared with 87.4 on June 23 prior to the announcement of the Brexit vote.
At the peak of the Covid pandemic in March 2020, the index plummeted to a low of 73.1.
On the index, 100 represents the value of the pound in January 2005.
