The pound has reached its strongest level against a basket of major currencies since the Brexit referendum vote in 2016, according to Bank of England figures. On Wednesday, sterling hit the highest level against 18 other currencies since June 23 2016, when the UK held its vote on EU membership.
Sterling's recovery since 2016
The pound plunged following the vote to leave the EU in 2016, hitting a 31-year low against the dollar in the aftermath. It has also been knocked in subsequent years by Covid, the 2022 mini-budget meltdown and a series of elections.
Sterling had been boosted ahead of the Bank of England's interest rate decision on Thursday in anticipation of the hike to 4%, marking its first increase for more than three years.
Dollar weakness boosts pound
While the pound slipped 0.1% lower to 1.346 dollars soon after the rate rise, it had shot up by half a cent against the greenback on Wednesday. The pound remained largely flat against the euro after the rate announcement, at 1.20 euros, but it last month surged to its highest level against the single currency for 18 months.
Some of the pound's strength comes from the weakness of the dollar, which has been sent sinking due to the midterm elections result and victory for the Democrats, while the euro has also been under pressure on worries over France's fiscal position.
Index data
The data on the pound was published on Thursday by the Bank in its sterling effective exchange rate index (EERI), which tracks the pound against a basket of other currencies. The figures showed the index reached 86.4 on Wednesday, having stood at 87.4 on June 23 before the Brexit vote was announced. It slumped as low as 73.1 in March 2020 at the height of the Covid pandemic. On the index, 100 equals the value of the pound in January 2005.
