Article by Currency Information and Research

Overview Of The British Pound

The origin of the British pound, or pound sterling as it is officially called, can be routed back to King Offa of Mercia, who introduced silver coins to the Saxon kingdoms. These coins, known as “sterlings”, were the sole currency of the time and for many years. 240 coins equaled one pound in weight, so large debt payments were settled in what was known as “pounds of sterling”, later abbreviated to “pounds sterling”. This coin quickly spread throughout the Anglo-Saxon kingdoms and was the standard coin of what is now England. In order to simplify accounting, the pound sterling was later divided into 20 shillings and 240 pennies (pence). The United Kingdom, in 1971, switched to the decimal system and changed the penny and shilling with a single coin, the penny, of which a 100 were equal to one-pound sterling. The British pound is the oldest currency that is still in use today.

The status of the British pound is currently favorable, and while it has had its ups and downs over the centuries, it has always been a strong currency. In fact, it is often the strongest currency in value. Over the past few years, the global reserves of the pounds sterling have increased due to economic stability of Great Britain. It can also thank the low interest rates of other currencies like the US dollar, the yen and the euro due to a current economic recession, whereas the central bank in Britain keeps its interest rates higher. The monetary policies of the Bank of England contribute to the pound maintaining a higher value that of other currencies.

The pound ranks number 4 behind the US dollar, the Euro, and the Japanese Yen for the worlds most traded currency. Investing in the British pound is usually a wise decision, but currencies do not generate returns in and of themselves, but rather one must invest in British assets. British companies are often traded on the US markets as well as the London Exchange. The most popular hours for trading in the pound are during the opening hours of the London Stock Exchange or at 8:00 GMT.

While the years between 2007 and 2009 have been tumultuous for the world economies, the United Kingdom is expected to be among the first to recover from this recession. The pound has suffered right along with the rest of its peers, but still has been able to maintain its higher value, never dropping below its other floated competitors. Of course, how quickly the British pound recovers depends largely on how quickly the global credit markets are restored after 2009.

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