British Pound Sterling General Info
The three letter currency code for the British Pound Sterling is GBP and the symbol is £. It is the domestic currency in Guernsey, Isle of Man, Jersey, South Georgia And South Sandwich Islands and United Kingdom.
The British pound (ISO: GBP) is one base unit of sterling – that being the name of Britain's currency – and is subdivided into 100 pence.
Contributing to around 13% of all foreign exchange deals, the pound, or sterling, is the world’s fourth most traded currency.
Reputedly, sterling is 1200 years old. It is said that Anglo-Saxon traders used silver pennies in the eighth century called ‘sterlings’, 240 of which would equal one pound in weight.
Due to its membership of the European Union, Britain could have adopted the euro as its currency upon its introduction in 1999, however the British government opted against this because it wanted to retain monetary policy independence and because it perceived euro adoption as offering only small economic benefits.
In recent years, the most significant event to affect sterling’s valuation was the UK’s vote to leave the European Union on June 24th 2016 – a day on which the exchange rate for GBP/USD fell by as much as 11%.
In the past two decades, the pound’s highest valuation against the dollar occurred in November 2007 when GBP/USD reached 2.1161. Its lowest value came in October 2016, three-and-a-half months after the historic ‘Brexit’ vote, when GBP/USD reached 1.1905.
GBP - Market View
In mid-September, sterling soared after Bank of England officials appeared to signal an imminent increase in UK interest rates.
At September’s meeting of the BoE, Governor Mark Carney said that an increase in UK rates would be appropriate “in the coming months,” and a day after that meeting one of the BoE’s most dovish committee members, Gertjan Vlieghe, solidified expectations for a hike when he said that “we are approaching the moment when [the] rate may need to rise.”
GBP/USD climbed to a fifteen-month high on September 20th of 1.3655 but entering the final week of September had fallen back to 1.35.
Negative news came in September from Moody’s, who downgraded the UK’s credit rating from Aa1 to Aa2 amid concerns for the UK’s public finances.
“The UK’s public finances [have] weakened significantly” and “fiscal pressures will be exacerbated by...[the UK’s] departure from the EU,” said the Moody’s press release.
The pound nonetheless remains strong and recent movements in the currency are embarrassing those who publicly predicted the worst for it, such as Guy Petcho of Voya Investment Management, who told Reuters in July that GBP/USD was set to fall into the 1.10s by year-end, and veteran investment advisor Beat Wittmann, who said in June that a big fall was coming in the second half of the year.
Other forecasts include those from HSBC and Morgan Stanley, who both predicted in August that GBP/EUR (1.129 on September 23rd) would fall to parity by either year-end (HSBC) or the end of Q1 2018 (Morgan Stanley).
GBP/USD - 02:23 BST
1 Day 1 Week: British Pound Sterling was down against the United States Dollar with the GBP/USD at 1.3504, a drop of -0.61% but remains up for the last 7 days with a rise of 1.12%.
3 Month Trend: GBP/USD is trading higher in the 3-month range [Hi:1.3642, Lo:1.2718] and for the quarter is up 5.87%.