Pound’s trade-weighted index reaches highest level since Brexit vote
The Bank of England measure hit its strongest level since June 2016 on 4 November, with reports citing both UK economic conditions and a weaker US dollar.
The Bank of England’s trade-weighted sterling index reached its highest level since the UK’s 2016 EU referendum on Wednesday, 4 November, according to data the Bank released on 5 November. The reading puts the pound’s value against a basket of currencies at its strongest in more than a decade. The Guardian reported a reading of 86.5372, while Business Live reported 86.4.
What the sterling index measures
The Bank’s sterling effective exchange rate index tracks the pound against a basket of currencies. Unlike the pound’s rate against the dollar or euro, it gives a trade-weighted view of sterling’s value across several currencies. Bloomberg described the index as a measure designed to capture changes in the competitiveness of UK traded goods and services.
The index stood at 87.9248 on referendum day, 23 June 2016, The Guardian reported. It fell to 84.441 the following day as markets reacted to the vote to leave the European Union. The index later dropped to 73.1 on 23 March 2020 during the Covid pandemic. Its latest level has also moved above the previous peak recorded in May 2025, Bloomberg said, after a steady rise since September.
Why sterling has strengthened
The index’s rise comes alongside gains against individual currencies. Bloomberg reported that sterling passed $1.35 during the week, its strongest level against the dollar since mid-September. Business Live said the pound gained about half a cent against the dollar on Wednesday, then traded around $1.346 shortly after the Bank of England’s rate decision.
The Guardian reported that the dollar weakened after the US midterm elections. Wealth Club chief investment strategist Susannah Streeter said signs of closer UK ties with Europe had helped bolster sterling, the Guardian reported. Bloomberg also cited resilient UK growth, signs the labour market was stabilising and reduced political risks as supports for the currency.
Bloomberg cited October figures showing private-sector activity expanded at its fastest pace in eight months and a two-year downturn in employment had ended. Business Live reported that markets had expected the Bank to raise its interest rate to 4%, its first increase in more than three years, and that sterling dipped after the increase was confirmed. The reports offer different explanations for the pound’s strength but do not quantify how much each factor contributed.
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Sources and context
- Pound hits highest level since its crash after 2016 Brexit voteThe Guardian
- Pound hits highest level since Brexit vote as Bank of England hikes ratesBusiness Live, republished by Yahoo News UK
- Pound Strength Gauge Hits Highest Since Brexit Vote Ahead of BOE HikeBloomberg, republished by Yahoo Finance
AI-assisted article checked against the listed sources. NewsJaws did not conduct interviews or attend the reported events.