British pound general info
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.
Market Outlook for the British pound sterling
20-February-19: Given Brexit uncertainties, 2018 wasn’t too bad of a year for the pound. Although it lost 7.5 percent of its value against the US dollar, it only lost 1.9 percent against the euro and gained nearly 3 percent against the Australian dollar.
In early 2019, the pound has been resilient, having gained several percent against most of the other G10 currencies despite UK politics being in a state of disarray and with all Brexit options still on the table. Sterling remains well down when compared with its recent history though: at the time of writing, against the US dollar it was 12 percent lower than levels prior to the UK’s EU referendum in June 2016.
Pound forecasts are futile given uncertainties over Brexit but estimates can be made for different outcomes. Currency analysts at HSBC said in February that sterling would be valued at levels near US$1.10 in the event of no-deal, near US$1.45 with a deal and at US$1.55 should Article 50 be revoked and Brexit cancelled. GBP/USD was quoted at US$1.305 at the time of this report.
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