Question to the HM Treasury:

To ask Her Majesty's Government what assessment they have made of the impact that a rapid and sustained rise in the value of the Pound could have on the UK’s economic recovery; and what assessment they have made of the need for intervention by the Bank of England in such cases.

The UK does not have an exchange rate target and the government does not have a desired level for sterling – the rate is set by the market.

Currency markets move up and down and it would not be appropriate for the Treasury to speculate on the impact of currency moves on the real economy. Any impact would necessarily adjust over time and be sensitive to the broader economic and financial context. The independent Monetary Policy Committee of the Bank of England has responsibility for monetary policy. Its primary objective, set out in law, is to maintain price stability, defined as a symmetric inflation target of 2 per cent, as measured by the twelve month increase in the Consumer Prices Index. The separation of fiscal and monetary policy is a key feature of the UK’s economic framework, so the Government does not comment on the conduct or effectiveness of monetary policy.

The pound currently sits 12% and 10% below the 10-year average exchange rate against the dollar and euro respectively.