Pound hits ten-year high since Brexit referendum — The Guardian

In the United Kingdom, the pound sterling reached its highest level against a basket of other currencies since 23 June 2016 — the day of the referendum on the country’s withdrawal from the EU. Bank of England data show that the British currency reached this level on Wednesday, The Guardian reports.

Ten-year high

The sterling effective exchange rate index, which tracks its performance against a basket of currencies, rose to 86.5372 points. The index uses the pound’s exchange rate in January 2005 as its base value of 100.

After the Brexit vote in 2016, the British currency sharply lost ground. At the time, the pound fell to a 31-year low against the US dollar, while the effective exchange rate index declined. The index reached its lowest value — 73.1 points — on 23 March 2020, during the Covid-19 pandemic.

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Impact of the dollar and rate expectations

The pound’s rise was supported by a weakening dollar after the US midterm elections, as well as the British currency’s recent strengthening against the euro and the yen. Investors also expected the Bank of England to raise interest rates for the first time in more than three years, which could make investments in pounds more attractive.

On Thursday, the pound was almost unchanged against the dollar and traded at $1.3463, after rising by more than half a cent the previous day. Against the euro, sterling weakened slightly to €1.1985, although it reached an 18-month high of more than €1.20 at the end of October.

European stock indexes also rose: the FTSE 100 and Germany’s Dax gained 0.6% each, while France’s Cac 40 added 0.8%.