Pound rises to its highest level since the Brexit referendum

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 were, and to a lesser extent, are, underestimating the improving momentum in the UK,”

A stronger pound can help rein in inflation, and increase buying power for consumers on imports and on holidays.

UK growth so far this year has outperformed all expectations, but there are signs that higher energy and fuel prices have now hit consumer confidence.

The Bank’s nine member Monetary Policy Committee faces an important decision on interest rates on Thursday, with the first rise in three years widely expected.

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