British pound's value reaches highest level in 10 years after Brexit referendum

Stability highlighted in contrast to French political and economic chaos

(London = Yonhap News) Correspondent Jiyeon Kim = The value of the British pound rose to the highest level in 10 years after the 2016 Brexit referendum.

According to the BBC and the daily Guardian, the effective exchange rate index (EERI) of the pound, which the Bank of England (BOE) calculates against 18 major currencies, is 86.54 as of the 5th (local time), the highest level since the Brexit referendum. This index uses January 2005 as its base value of 100.

The pound has shown the steepest rise this year among the 10 major currencies, and as of this week, when the midterm elections were held in the United States, its value against the dollar has fluctuated over $1.35 per pound, trading at its highest level since September.

Even on the 5th, when the Bank of England announced an increase in the base interest rate, it fell slightly during the morning session, but recovered again and is trading at a level of $1.347 per pound, similar to the battlefield.

Immediately after the Brexit referendum, the pound's value against the dollar plummeted to its lowest level in 31 years.

EERI fell to 73.1 in March 2020 during the COVID-19 pandemic, which was lower than the day of the Brexit referendum, and also plummeted during the controversy over the Liz Truss government's tax cut plan in 2022.

Then, it has steadily risen since last September.

Market experts point to the fact that the UK has recently been accelerating the improvement of its relations with the European Union (EU), its financial and political situation is relatively stable compared to other major European countries, and its economic growth rate is relatively high for a major developed country.

“It’s not surprising,” said Jim O’Neill, an economist and former deputy Treasury secretary. “People have underestimated the improving economic momentum in the UK, and to some extent still do.”

Susanna Streeter, Wealth Club's chief investment strategist, said, "The country's reputation as a stable country is gaining prominence among global investors," adding, "The political and economic difficulties across the English Channel in continental Europe, especially France, are in sharp contrast."

When asked at a press conference today whether a closer relationship with the EU would help the British economy, BOE Governor Andrew Bailey indirectly responded, "I support trade and openness."