The British Pound – Fourth Most Traded Currency in the World

Through war, peace and a new common currency, the British pound has always persevered.

The pound sterling or British pound, the official currency of the United Kingdom, is the oldest currency in continual circulation today.

It is also used in Jersey, Guernsey, the Isle of Man, South Georgia and the South Sandwich Islands, the British Antarctic Territory and Tristan da Cunha, where most refer to the monetary unit as simply ‘the pound’.

In the foreign exchange market, you will find the British pound represented as GBP while the symbol used to represent it is £. The pound sterling falls fourth in line as one of the world’s most often traded currencies and is the third most held currency in reserve around the globe. The United Kingdom is one of just a few European nations which chose not to make the change to the euro in 1999. As a result, the British pound lost its footing in the currency exchange market and now typically falls behind the US dollar, euro and Japanese yen.

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Value and exchange rates of the British pound as of Jun 28, 2017

Compare today’s foreign exchange rates between the GBP and other currencies.

Refreshing in: 60s | Thu, 29 Jun 12:21am GMT
1 USD = 1.0000 1.3083 Inverse: 0.7644 1.3034 Inverse: 0.7672 0.878203 Inverse: 1.1387 6.7983 Inverse: 0.1471 0.77266 Inverse: 1.2942 64.507442 Inverse: 0.0155 17.8350 Inverse: 0.0561 50.470001 Inverse: 0.0198
1 AUD = 0.7644 Inverse: 1.3083 1.0000 0.9962 Inverse: 1.0038 0.6713 Inverse: 1.4897 5.1963 Inverse: 0.1924 0.5906 Inverse: 1.6932 49.3064 Inverse: 0.0203 13.6322 Inverse: 0.0734 38.5768 Inverse: 0.0259
1 EUR = 1.1387 Inverse: 0.8782 1.4897 Inverse: 0.6713 1.4841 Inverse: 0.6738 1.0000 7.7411 Inverse: 0.1292 0.879819 Inverse: 1.1366 73.453867 Inverse: 0.0136 20.3085 Inverse: 0.0492 57.4696 Inverse: 0.0174
1 GBP = 1.2942 Inverse: 0.7727 1.6932 Inverse: 0.5906 1.6869 Inverse: 0.5928 1.1366 Inverse: 0.8798 8.7986 Inverse: 0.1137 1.0000 83.487438 Inverse: 0.0120 23.0826 Inverse: 0.0433 65.3198 Inverse: 0.0153

History of the British pound

For the better part of its history the currency of England was based on the weight of its coins. This led to severe punishment for those who produced coins that were substandard, or did not contain the standard amount of silver or gold that they were meant to represent.

It was Henry II who labored to improve the quality of the coins and in 1282 Edward I began the practice of checking for purity. This formal ceremony known as the ‘Trial of the Pyx’ is a tradition that is still practiced to this day.

By the time England entered into the American Revolutionary War and the Napoleonic wars, banknotes were legal tender with their value floated in relation to gold. By 1816 they officially adopted the gold standard, paving the way for the rest of the world to follow suit with their own currencies. This allowed for conversion rates to be easily determined based off of gold standards. This meant that by the start of the 20th century the British pound was equal to; 4.85 US dollars, 5.25 Canadian dollars, and 23.10 Dutch guilders.

During the early part of the 20th century, the United Kingdom had one of the strongest economies in the world with close to half of the planets overseas investments. This ended as the first world war started, and the gold standard was dropped to allow for banknotes to become legal tender.

The war devastated the economy of England, and in 1940 they allowed for the pound to be pegged to the US dollar (USD) at a rate of 1 pound for 4.03 USD. This was a drop from the $4.86 that had been the value just the year before. Still struggling economically, the pound was devalued twice again, first in 1949 to $2.80 USD and then in 1967 to $2.40 USD. Finally, in 1971 the value of the pound was floated, allowing it to compete with other currencies based solely on its strength and buying power.

Throughout the 1970s and 1980s, the value of the pound rose and fell with the English economy. In 1979 it was on the rise, valued at $2.40 USD but dropped sharply to $1.03 USD in 1985 before showing some growth in 1989 by reaching $1.70 USD in value. Despite its fluctuations, the government of the United Kingdom chose not to join the rest of Europe in adopting the euro as their new official currency in 1999, a decision which lowered the United Kingdom’s position as having one of the top three dominant currencies in the world.

The 2008 economic crisis that began in the United States allowed the British pound to reach on if its highest value points in recent history, breaking the $2.00 USD mark briefly in 2007. After this surge, the value of the pound fell at one of its fastest rates in history, falling to $1.38 USD by the beginning of 2009. Since that time, it has risen slightly as the economy in England and around the world slowly improves.

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History of the British Pound

The origins of the British pound date back to the 700s AD, when King Offa of Mercia introduced the silver penny to his empire. 240 pennies were the equivalent of one pound, and their use as a common currency quickly spread throughout the other Anglo-Saxon kingdoms that would one day become England.

Pennies were used exclusively for trade in England until 1489 when under King Henry VII the first pound coin – called a sovereign – was introduced. In 1504 the shilling also entered into circulation. Gold coins began to be minted in 1560, but were changed to copper by 1672. The Bank of England was established in 1694, which is when the nation began producing its first handwritten banknotes.

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Coins and banknotes of the British pound

Throughout its long history the currency of the United Kingdom has gone through many changes with dozens of different coins lining its path. Today it has been simplified.

The 1p, 2p, 5p, 10p, 20p, 50p, and £1 coins share a near-uniform design of Queen Elizabeth II on the front and a different segment of the United Kingdom Coat of Arms on the reverse of each. The currency now includes only the following:

  • 1p. The modern penny was issued in 1971.
  • 2p. The two-pence coin is often referred to as a tuppence or tupenny. This coin was also introduced in 1971.
  • 5p. The current version of the five pence was introduced in 1990 to replace a larger coin that has since been demonetized..
  • 10p. Roughly the size of a US quarter, the 10 pence coin depicts a lion wearing the crown of the British Monarch. It was entered into circulation in 1992 to replace a larger version of the same coin.
  • 20p. The 20 pence coin was entered into circulation in 1982.
  • 50p. The current, smaller version of the 50 pence coin was issued in 1997.
  • 1 pound. The one pound coin was introduced in 1983.
  • 2 pound. On the edge of the two pound coin reads “Standing on the Shoulders of Giants” by Sir Isaac Newton, while the center features a design representing technological development. This coin was entered into the currency in 1998.

The British Pound

Above you can see some of the previous coin designs.

All banknotes issued in the United Kingdom feature a picture of Queen Elizabeth II on one side along with a famous historical figure on the other:

  • 5 pound. The current five pound note features a picture of Elizabeth Fry, who fought for improved living conditions for women inside of European prisons.
  • 10 pound. Charles Darwin is depicted on the ten pound note along with a picture of his magnifying lens.
  • 20 pound. Issued in 2010, the current 20 pound note features Adam Smith and replaced an older version which depicted composer Sir Edward Elgar on its back.
  • 50 pound. Matthew Boulton and James Watt, of Boulton & Watt steam engines, are featured on the current 50 pound note.
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