Use of the symbol GBP is to be taken with caution since it divides the money into 100 “Penny” or “Pence” (100 GBP = 1 GBP = £ 1). The British Pound (also called Sterling) is the fourth most traded currency in the world after the U.S. Dollar, Euro and Yen. It also serves as a reserve currency in the amount of 4% of world reserves.
This decimal subdivision (currency in multiples of 100) occurred in 1971. Until 1981, the currency was known as the “New Pence”. Before this decimalization, the pound was divided into 20 shillings and 12 pence each in Shillings. This required 240 pence to a pound, whose weight is a pound of silver.
The Bank of England (BoE)
The Bank of England was created in 1694, just before the Bank of Scotland, which both issued paper currency. The Scottish pound was originally equivalent to the pound but suffered a significant devaluation until it is attached to Sterling for a value of 12 Scottish pounds = 1 pound. In 1707, the Kingdom of England and Kingdom of Scotland merged to form the Kingdom of Great Britain and replacing the Scottish pound in Sterling. It was then in 1826 that the Irish pound was replaced in British Pound worth 13 Irish pounds = 12 British Pounds.
The British Pound backed to U.S. Dollar
In 1940, an agreement was signed with the United States to attach the book to the U.S. dollar at a rate of £ 1 = $ 4.03. This rate was maintained through the Second World War and became part of the Breton Woods who chaired the exchange rate after the war. Under the persistent pressure of the economy, 19 September 1949 the government devalued the pound by 30.5% to $ 2.80. This move prompted several other currencies to be devalued against the U.S. Dollar.
In 1961, 1964 and 1966, the pound was still under pressure since the exchange rate against the dollar was considered too high. In the summer of 1966 with the value of the pound sterling collapsed on the foreign exchange market, the control has been strengthened by the Wilson government. Among these measures, tourists were banned from taking more than 50 pounds in the country, until the restriction was lifted in 1979. The pound was eventually devalued by 14.3% to $ 2.40 on November 18, 1967.
The British Pound (GBP) on the foreign exchange market
The pound is mostly traded against the U.S. Dollar. The GBP / USD is called market operators “cable” in reference to cableway that was installed in 1858 between London and New York as the sole means of business communication. According to the latest triennial report of the BIS (Bank for International Settlements), 12.9% of world trade in the FOREX market are made through the GBP. 360 billion U.S. dollars are traded daily on average GBP / USD. The EUR / GBP is traded on average up to 109 billion U.S. Dollars per day.