From the Guardian · · 2m
Pound hits 10-year high as investors back UK-EU ties
Sterling reaches its strongest level since the Brexit referendum as the dollar weakens and the Bank of England raises interest rates.
In brief
Sterling reaches its strongest level since the Brexit referendum as the dollar weakens and the Bank of England raises interest rates. The pound hit its highest level since June 23, 2016, as investors welcomed UK moves toward closer European ties and the Bank of England raised rates. Originally reported by the Guardian.
Pound reaches 10-year peak
The pound hit its strongest level against a basket of other currencies since June 23, 2016, the day of the EU referendum, according to Bank of England data released Thursday.
Investors welcome UK-Europe moves
Susannah Streeter, chief investment strategist at Wealth Club, said the pound benefited from signs the UK was building better relations with Europe. She noted the UK's reputation for stability was regaining lustre.
“There is a sense that the UK is beginning to be viewed in a more favourable light by international investors, with its reputation for stability starting to regain some lustre.”
Bank of England raises rates
The pound also benefited as investors anticipated the Bank of England's interest rate rise on Thursday, the first in more than three years, making sterling more lucrative to hold.
Dollar weakens after US midterms
The dollar weakened after Democrats' victory on Wednesday, amid a risk-on rally that led money to flow into other currencies. Jim Reid of Deutsche Bank said relief that results were not disputed reduced political uncertainty.
“When it came to the market reaction, there was relief among investors that the results weren't disputed, which helped to reduce political uncertainty.”
Sterling index hits 86.5372
The Bank of England's sterling effective exchange rate index, which tracks the pound against a basket of currencies, reached 86.5372. On the index, 100 equals the pound's value in January 2005.
Recovery from Brexit lows
In 2016 the pound hit a 31-year low against the dollar in the hours after the Brexit vote, pulling the index down to 84.441 on June 24, 2026.The index fell as low as 73.
UK and EU to announce trade deals
The UK and EU are expected to announce new trade deals at a summit later this month.Streeter said closer European ties could boost growth if they translate into fewer trade frictions and closer economic cooperation.
“The improving relationship with Europe could offer a further boost to growth further down the line, if it translates into fewer trade frictions and closer economic cooperation.”
What it means
The pound hit its highest level since June 23, 2016, as investors welcomed UK moves toward closer European ties and the Bank of England raised rates.
