Through war, peace and a new common currency, the British pound has always persevered.
The oldest currency in continual circulation today, the pound sterling or British pound is the official currency of the United Kingdom. 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’. There are also a number of other nations around the world who call their currency the pound, but those are not tied to the money which is distributed by the Central Bank of England.
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.
Value and exchange rates 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 War for Independence 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 1970’s and 1980’s, 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.Back to top
History of the British Pound
The origins of the British pound date back to the 700’s 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, and with that the nation began producing its first handwritten banknotes.Back to top
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 and includes only the following:
- 1p. The modern penny was issued in 1971 and features the portcullis of Westminster Palace on its front.
- 2p. The two-pence is often referred to as a tuppence or tupenny. This coin was also introduced in 1971 and features the Prince of Wales feathers.
- 5p. The current version of the five pence was introduced in 1990 to replace a larger coin that has since been demonetized. It features the thistle with the British crown sitting on top.
- 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 wears the Tudor Rose with the British Crown gracing the top. It was entered into circulation in 1982.
- 50p. The current, smaller version of the 50 pence coin was issued in 1997 with a picture of Britannia and a lion.
- 1 pound. The one pound coin was introduced in 1983. There are three versions to represent each of the countries: three lions for England, a thistle for Scotland and a leek for Wales.
- 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.
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 gaols.
- 10 pound. Charles Darwin is depicted on the ten pound note along with a picture of his magnifying lens.
- 20 pound. Issued in 2007, the current 20 pound note features Adam Smith and replaced an older version which depicted composer Sir Edward Elgar on its back.
- 50 pound. The first Governor of the Bank of England, Sir John Houblon, is featured on the current 50 pound note.