Will another currency “change prefix” soon against the shekel?

It is also possible that it will soon change its prefix and trade for less than NIS 4 per pound, at least that is what the Harel Insurance Company estimates. There, the Telegram channel notes that “this week, another currency is expected to change its prefix: the victory of the shekel” and mention that “in the early 2000s, those who wanted to fly to London remember a completely different reality. The pound soared to crazy values ​​of over 8 shekels… The shekel then looked weak and vulnerable against the proud British currency.”

Now this is the lowest level of the British currency since 2022. If its representative rate weakens below NIS 3.7567, this will be its lowest level since the early 1990s. Beharel enthusiastically adds that “It didn’t happen by chance, it happened because we became a high-tech powerhouse, because we learned to manage a responsible economy and because the shekel became one of the strongest currencies in the world. From a starting point of complete dependence on the British (at the time of the establishment of the state, Israel), through a low of 8 shekels per pound, we reached a power that cannot be ignored.”

On the other hand, Dror Zakash, director of the advisory unit for foreign exchange companies at the International Bank, is less excited and claims that it is less substantial since, “Most Israeli trade is in dollars and euros, therefore the trade and exchange rates of the shekel/sterling are less significant. But of course this makes it difficult for the exporters who export to England.”

The Bank of Israel also buys pounds

But it is not certain that the Bank of Israel agrees with ZAKS. Not many people know, but within the huge foreign exchange balances held by the Bank of Israel (about 230 billion dollars), quite a few British pounds are also hidden. According to the Bank of Israel, about 5% of its foreign exchange balances at the end of 2025 are pounds sterling, which is about NIS 40 billion. The Bank of Israel also holds these balances to be used occasionally if there is a need to mitigate fluctuations in the exchange rate.

Moti Azoulay, manager of the foreign exchange and derivatives desk at Migdal Insurance and Finance, notes that the last time the pound weakened against the shekel like this happened during the short tenure of Liz Truss’s government, when it happened “due to the political problems in the British Isles, and mainly due to the fear of financial instability. Since then, the pound has recovered globally but is still historically low.”

According to him, the reason for this is that “growth in the British Isles is relatively low and, on the other hand, inflation is raising its head again, to 3.3% in the last year and the unemployment rate is climbing to 5% and more. The market fears a further increase in inflation due to the crisis in the Middle East and has even moved to price in the UK interest rate hikes this year and at the beginning of 2027, a little more than 2 interest rate hikes, when at the beginning of the year the market still expected a little more than one interest rate cut on the island.

“In addition, the ‘Ionic’ interest rate decision was recorded at the beginning of the year, when a narrow majority voted to leave the interest rate unchanged, with growth and inflation forecasts that were updated downward. The political instability continues to cloud the currency’s performance in recent months as well.”