Sterling Climbs to Post-Brexit High as Traders Rethink the UK

Sterling just hit its highest level since Britain voted to leave the European Union in June 2016. The climb marks a sharp turn for a currency that spent years getting pummelled by Brexit headlines, the pandemic and the chaotic 2022 mini-Budget.

Traders say the UK is being viewed differently now, according to BBC News. Relative political stability, solid growth and a rapprochement with the European Union are doing the heavy lifting, they said. Sterling has always been twitchy about Brexit and Westminster drama, so calmer water is a change it clearly likes.

Economist and former Treasury minister Jim O'Neill wasn't shocked by the move. He told the BBC that people had been underestimating the improving momentum in the UK, and to a lesser extent still are. The pound has reacted strongly to shifting Brexit fortunes and political uncertainty for years, so a rally built on calm is a notable reversal.

A stronger pound has real-world effects. It helps rein in inflation and boosts what consumers can buy on imports and on holidays abroad. UK growth so far this year has beaten expectations, though higher energy and fuel prices are now showing signs of denting consumer confidence.

Next up is the Bank of England. Its nine-member Monetary Policy Committee meets Thursday, with the first interest rate rise in three years widely expected. That decision lands right as the currency enjoys its best run in nearly a decade — and everyone will be watching whether it holds.

The backdrop is a country that spent years being the cautionary tale of global markets, now getting a second look. Whether sterling's run has legs depends on growth holding up, inflation easing and politics staying boring — three things the UK has struggled to deliver at once.