Business · Markets · 1 hr ago
Pound reaches its highest level since the Brexit referendum
The pound has reached its strongest level since early 2016, according to an index that compares sterling with 18 major currencies.
The rise comes as the Bank of England is widely expected to increase interest rates on Thursday, its first rise in three years.
Sterling weakened after the 2016 Brexit referendum and hit further lows during the Brexit process, the Covid pandemic and the 2022 mini-Budget.
Traders point to stronger UK growth, relative political stability and closer ties with the European Union as factors supporting the currency.
A stronger pound can make imports and overseas holidays cheaper for people in Britain and may help reduce inflation.
The Bank’s decision and guidance are the next test for sterling, as investors look for signals about whether more rate rises will follow.
Markets have priced in several further increases, but analysts say those expectations could change with economic conditions.
Sterling has reached its highest level since the Brexit referendum, according to the reports.
The sterling effective exchange rate index stood at 86.4, its highest reading since the first quarter of 2016.
The pound has strengthened against the euro and the US dollar over the past year.
A Bank of England interest-rate rise was widely expected on Thursday, with traders focused on the vote and the Bank’s guidance.
Analysts warned that any signal against further rate rises could put pressure on sterling.
- Who
- Sterling, the UK currency.
- What
- It reached its highest level since the Brexit referendum, with an effective exchange rate index reading of 86.4.
- When
- The reading was reported on 5 November 2026.
- Where
- The UK and international currency markets.
- Why
- The sources cite expected interest-rate rises, improving UK growth and relative political stability as factors supporting sterling.
Traders citing UK conditions
George Vessey, Convera macro strategist
Outlook
Traders citing UK conditions
Some traders said sterling was benefiting from relative political stability, solid growth and improved relations with the EU.
George Vessey, Convera macro strategist
Vessey said the interest-rate path priced by markets looked ambitious and that a Bank of England pushback could weaken sterling.
The Brexit referendum took place, after which sterling fell significantly.
The sterling effective exchange rate index reached a low of 78.08.
The BBC reported that the pound had risen to its highest level since the Brexit referendum.
The Independent reported an index reading of 86.4 ahead of the expected Bank of England rate decision.
- Effective exchange rate index
- 86.4
- Index comparison
- 18 major world currencies
- Euro exchange rate
- £1 was worth €1.1981, compared with €1.1334 a year earlier
- US dollar comparison
- The pound was worth 3.5 per cent more US dollars than a year earlier
- Expected Bank of England decision
- Thursday, 5 November 2026
3 sources
What people are saying
I'm not surprised. People were, and to a lesser extent, are, underestimating the improving momentum in the UK,
The hike itself is not the story. With markets assigning around a 95 per cent probability to such an outcome, attention instead turns to the vote split, updated forecasts and Governor Bailey's guidance,