Annual reweighting of the sterling exchange rate index

As announced on 11 February 2022, the Bank has now completed the regular annual update of the sterling exchange rate index weights. The new set of weights took effect from 9 March 2022 and incorporates revisions from 2016 onwards.


The sterling exchange rate index (ERI) is a measure of the overall change in the trade-weighted exchange value of sterling, calculated by weighting together bilateral exchange rates. It is designed to measure changes in the price competitiveness of traded goods and services, and so the weights reflect trade flows in manufactured goods and services.

Using the USA as an example, the weights for the US dollar in the sterling ERI are based on:

  • competition in the UK domestic market from imports from the USA
  • competition between UK exports and US products in the USA
  • competition between UK and US exports in third-country markets.

The methodology for constructing sterling ERI is explained more fully in the article:

PDFThe new sterling ERI 

Narrow and broad sterling ERI

There are two measures of the sterling ERI available: narrow and broad. 

Countries are included in the narrow index if their share of either UK imports or exports on average over the latest three-year period is greater than 1%.  ERI weights for each selected country are based on the latest available full set of world trade data, currently 2020. The January 2005 average index value is set equal to 100.

The broad version of the sterling ERI uses the same methodology but has an expanded country set. Countries are included in the broad index if their share of UK imports or exports on average over the latest three-year period is greater than 0.5%. 

Countries in the euro-area are included in both the narrow and the broad index regardless of their trade share.

To reflect changing trade patterns, the weights and country set are allowed to change over time to give an annually chain-linked index. These weights are updated each year with newly available world trade data, so that weights based on 2020 trade data are now used to calculate the chain-linked ERI from the beginning of 2021 onwards. Revisions to the weights stemming from revised trade data result in small changes to past values of the indices.


Latest sterling ERI weights

We publish new sterling ERI weights in March each year:

Sterling ERI weights (published 9 March 2022) 

This year’s key changes to the narrow sterling ERI

As a result of this year’s update Malaysia leaves the broad measure in 2017. There have been no changes to the membership of the narrow measure as a result of this year’s update.

The table below illustrates the most notable changes to the narrow index from this year's reweighting exercise and shows countries where a new or existing weight has changed by more than 0.2% in absolute terms. The index remains referenced to January 2005=100. 

  2018 2019 2020 2019-2020 2018 2019
Y-on-Y change1 Revision1 Revision1
Belgium and Luxembourg  4.5%  4.5%  4.7% 0.3%  0.0%  0.1% 
China 8.9% 9.1% 11.1%  2.0% 0.3% 0.2%
France 6.9% 6.9% 6.1%  -0.7% 0.0% -0.2% 
Italy  3.7%  3.6%  3.4%  -0.2%  -0.3%  -0.3% 
Portugal  0.8%  0.8%  0.6%  -0.2%  0.0%  0.0% 
Singapore  1.3%  1.5%  1.4%  -0.1%  0.1%  0.2% 
Spain  4.0%  4.1%  3.3%  -0.8%  -0.1%  -0.1% 
United States of America 19.1% 20.1% 20.4%  0.2% 0.0% 0.2% 
Euro area total 47.5% 46.3% 44.1%  -2.2% -0.4% -0.5% 
RoW total 52.5% 53.7% 55.9%  2.2% 0.4% 0.5% 

1Differences are due to rounding.

There have been revisions to services imports and exports data from 1999. The most significant impact on the country weights are from 2016 onwards. As a result pre-2016 revisions were omitted for this re-weighting exercise. 

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