GBP - British Pound Sterling

Overview of the British Pound Sterling (GBP)

The history of the formation and development of the British Pound Sterling (GBP)

• Before the time of the pound

During the Anglo-Saxon period, silver coins were used in trade. King Offa issued a silver penny weighing 1.5g. 

240 silver pennies are equivalent to one unit of silver called a Tower Pound.

In 1526, the silver Pound was converted into the Troy pound, and the British pound originated from the value of the silver mass of the Tower Pound.

• The British Pound (pound sterling)

The name Pound originates from the Tower Pound with a silver content of up to 92.5%. However, by 1551, the silver content in the penny had decreased to only ⅓ of its original amount. 

Under Queen Elizabeth I, the pound was solidified and maintained its value through various economic and financial crises. Even after England switched to the gold standard, the pound sterling maintained its stable value.

• Gold standard

In the 18th century, the British pound shifted to the gold standard. The pound depreciated due to high debts from the United States, but by 1925, the gold standard was restored. Not long after that, in 1931, the gold standard was abandoned due to the Great Depression, and it depreciated by 25%.

• Pegged tightly to the US dollar

After abandoning the gold standard, the British Pound was pegged to the US Dollar. In 1949, the pound depreciated by 40%. Continued to depreciate by 14.3% in 1967, and after the collapse of the Bretton Woods monetary system, the British pound was floated. 

• Pegged to the West German Mark

In 1988, the British pound was linked to the West German mark, leading to inflation and crisis. By 1992, the UK withdrew from the European Exchange Rate Mechanism due to the economy's inability to sustain itself.

• Pursuing the goal of controlling inflation

In 1997, the government delegated interest rate control to the Bank of England. With the goal of maintaining inflation at 2%. If there are any fluctuations, the bank must inform the government to implement timely control measures.

• The connection with the Euro (Euro)

England withdrew from the EU in 1975 due to political controversies and national pride in the British Pound. Although not tied to the EU, the British pound and the Euro often fluctuate together.

The British Pound Sterling (GBP) Denominations

The British Pound is issued in the form of coins and banknotes, including the following denominations.

British Pound coins

Coins in the United Kingdom are issued by the Royal Mint. Including denominations: 1, 2, 5, 10, 20, 50 pence and £1, £2. There is also a 5-pound coin, but it is rarely used.

• 1 cent: Image of the city gate.

• 2 cents: The emblem of the Duke of Wales.

• 5 pence: Image of the Thistle flower - the national flower of Scotland.

• 10 pence: The image of a lion symbolizing England.

• 20 pence: The Tudor rose, a symbol of England.

• 50 pence: The image of the goddess Britannia and a lion.

• 1 pound: The Celtic cross, a symbol of Northern Ireland.

• 2 panels: In the words of Isaac Newton: "Standing on the Shoulders of Giants”

British Pound banknotes

Banknotes are issued by the Bank of England and banks in Scotland and Northern Ireland with denominations of £5, £10, £20, and £50. The banks in Scotland and Northern Ireland must deposit collateral with the Bank of England corresponding to the amount of circulating banknotes.

Currently, the banknotes feature images of famous historical figures:

• 5 boards: Winston Churchill - politician and Prime Minister of Britain during World War II.

• 10 pounds: Jane Austen - the female novelist with famous works such as "Pride and Prejudice."

• £20: J. M. W. Turner - a famous landscape painter known for his watercolor paintings.

• £50: Matthew Boulton and James Watt - pioneers in the development of the 18th-century steam engine. Since 2021, the £50 note has also featured Alan Turing, the mathematician who laid the foundations for modern computer science.

In addition, there are £100 banknotes, but they are not widely circulated. The £1 banknote is mainly used in the Channel Islands and Scotland.

The value of the British Pound (GBP) against the USD and GBP

The British pound has maintained its stable value thanks to strict inflation control measures. At the same time, economic growth and effective monetary policy adjustments from the Central Bank.

The exchange rate of the British pound against the USD is 1 GBP = 1.31 USD and against the Euro is 1 GBP = 1.19 EUR. 

However, inflation in the UK remains high, prompting the central bank to maintain a tighter monetary policy. The pressure from the US dollar and the stability of the Euro strongly affect the GBP exchange rate.