Pound hits highest level since Brexit vote ahead of expected interest rate rise

4th November 2026

British pound banknotes and penny coins on a table — Photo: Mehaniq / Shutterstock

The pound has climbed to its joint highest level since the 2016 Brexit referendum, as traders bet the Bank of England will raise interest rates on Thursday for the first time in more than three years.

Sterling’s trade-weighted index, which measures the pound against a basket of 18 major currencies, reached 86.4, matching its strongest level since the June 2016 vote. It has gained against both the US dollar and the euro.

Why the pound is rising
🏦 The Bank of England is expected to raise rates from 3.75% to 4% on Thursday
🇺🇸 The dollar has weakened after Democrats won both houses of Congress in the US midterms
📈 UK growth has beaten expectations this year
🇪🇺 Traders also point to political stability and closer ties with the EU

What it means for you

A stronger pound is good news for anyone heading abroad, as holiday money goes further in the US and Europe. It also makes imported goods a little cheaper.

But the reason behind it is less welcome for borrowers. Inflation rose to 3.5% in September, and a rate rise on Thursday would push up costs for more than two million households on variable or tracker mortgages. Around 2.3 million fixed-rate deals end in 2027.

Former Goldman Sachs economist Jim O’Neill said people had been “underestimating the improving momentum in the UK”.

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