UK real effective exchange rate: narrow basket
UK real effective exchange rate: narrow basket stood at 111.46 in Aug 2026, according to Bank for International Settlements (BIS). It is one of the indicators in the Effective exchange rate table (Value · Monthly), with a complete series running from Jan 1964 to Aug 2026. The complete series with an interactive chart, free to download.
This indicator in the Effective exchange rate table
| Indicator | 08-2026 | 07-2026 | 06-2026 | 05-2026 | 04-2026 | 03-2026 | 02-2026 | 01-2026 | 12-2025 | 11-2025 | |
|---|---|---|---|---|---|---|---|---|---|---|---|
| Real, narrow basket (27 economies) | 111.46 | 111.72 | 110.52 | 110.22 | 109.9 | 109.94 | 110.24 | 110.64 | 110.11 | 108.69 | |
| Nominal, narrow basket (27 economies) | 106.09 | 106.2 | 105.17 | 105.06 | 104.69 | 104.69 | 104.65 | 104.88 | 104.19 | 103.17 | |
| Real, broad basket (64 economies) | 112.33 | 112.26 | 111.08 | 111.24 | 110.93 | 110.96 | 111.09 | 111.71 | 111.62 | 110.22 |
Understanding UK real effective exchange rate: narrow basket
Weighted against a restricted cohort of twenty-seven trading partners, this index computes the external purchasing power of the pound after adjusting for international inflation differentials. By subtracting relative price changes between the United Kingdom and this specific group of economies, the series isolates shifts in genuine competitiveness from domestic and foreign consumer price movements. This narrow basket confines its weighting scheme to major trading nations, omitting emerging markets and smaller economies that dominate the broader alternative row. Goods and services trade weights determine each partner's share in the calculation, reflecting bilateral exchange intensity rather than global market dominance alone.
Interpreting this measure requires accounting for the staggered release schedules of consumer price indices across partner countries, which frequently necessitates preliminary estimations that are subject to later revision. Seasonal patterns are generally subdued in trade-weighted indices, yet monthly fluctuations can still mirror transient price shocks rather than enduring shifts in external equilibrium. Comparing this inflation-adjusted metric directly with unadjusted nominal equivalents reveals whether movements stem from currency appreciation or simple divergence in inflation rates. Analysts examining competitiveness should evaluate multi-month shifts rather than isolated monthly changes, since shipping bottlenecks and energy price swings can temporarily distort price differentials without altering underlying trade dynamics.
Frequently asked questions
- Why does this index use twenty-seven economies instead of a larger group?
- The narrow basket focuses exclusively on the most significant trading partners of the United Kingdom, where bilateral trade flows are densest and price data is most timely.
- How does the inflation adjustment alter the interpretation of the exchange rate?
- It strips out the impact of differing inflation rates between the United Kingdom and its trading partners, showing pure shifts in international price competitiveness.
- Are preliminary figures for this series revised often?
- Yes, because consumer price indices for several partner economies are published with a lag, initial calculations rely on estimates that get updated as final data arrives.