A recent rumour suggesting the UK might reinstate the gold standard has ignited widespread discussion on social media, briefly impacting the pound’s exchange rate against the dollar. However, investigations reveal the claim stems from a post simulating a 1925 historical event, not reflecting current UK monetary policy. The Bank of England continues to adhere to its existing framework, focusing on navigating global trade tensions and domestic economic challenges.
Origins of the Gold Standard Rumour
Earlier this week, a post circulating on the X platform claimed that the UK Chancellor of the Exchequer had announced a return to the gold standard, prompting a “sharp surge” in the pound’s value. The post referenced a 1925 speech by then-Chancellor Winston Churchill, when the UK briefly reinstated the gold standard. No official statements from the Bank of England or HM Treasury have supported such a policy shift in 2025. Analysts suggest the rumour may have arisen from a misinterpretation of historical content or deliberate misinformation.
The gold standard ties a currency’s value directly to gold. The UK adhered to this system through much of the 19th and early 20th centuries but abandoned it in 1931 amid economic pressures. Modern economists widely view reinstating the gold standard as impractical in today’s globalised economy, as it limits a central bank’s ability to adjust interest rates and money supply to address economic fluctuations.
“Such rumours reflect public anxiety about economic uncertainty, but the UK’s monetary policy remains anchored in a flexible inflation-targeting regime, not a return to the gold standard,” said Professor Emma James, an economist at the London School of Economics.
Current Monetary Policy: Tackling Global Trade Challenges
The Bank of England has maintained its base interest rate at 4.75% since 2024, adopting a cautious approach to balance inflation and economic growth. In early 2025, US President Trump’s tariff policies disrupted global trade, prompting the International Monetary Fund (IMF) to downgrade the UK’s 2025 growth forecast from 1.6% to 1.1%. To counter potential economic slowdown, markets anticipate the Bank may gradually lower rates in the second half of 2025 to stimulate growth.
“US tariffs are pressuring UK exports, particularly in the automotive and steel sectors,” said John Smith, Chief Economist at the British Chambers of Commerce. “The Bank must closely monitor inflation and employment data to determine any policy adjustments.”
The pound’s recent performance has been influenced by a strong US dollar and global risk aversion. Gold prices surpassed $3,500 per ounce in April 2025, reflecting investor concerns over currency devaluation and geopolitical risks. While the gold standard rumour has been debunked, gold’s appeal as a safe-haven asset has risen, indirectly affecting the pound’s market dynamics.
Outlook: Flexibility Remains Key
Chancellor Rachel Reeves, speaking at the IMF’s spring meetings, underscored the UK’s commitment to “free and fair trade” and engaged with the US Treasury Secretary to discuss reducing tariff barriers. Meanwhile, Bank of England Governor Andrew Bailey reiterated that monetary policy will remain data-driven, targeting a stable 2% inflation rate.
Market analysts predict the pound may stabilise in late 2025 as global trade dynamics clarify, though short-term volatility is likely due to ongoing uncertainties. Experts urge investors to dismiss gold standard rumours and focus on official policy announcements.
“The UK economy faces multiple challenges, but the Bank has robust monetary tools to respond,” Bailey stated in a recent address. “Our focus is on price stability and fostering sustainable growth.”
