Code: GBPSymbol: £Subunit: penny (100p)Central bank: Bank of EnglandNickname: Cable / Sterling / Quid
A 1,200-year history
The pound is among the oldest currencies still in circulation. Its name comes from the Latin libra — hence the £ symbol, a stylised L — and originally meant one pound weight of silver. Anglo-Saxon kings were minting silver pennies in the 8th century; 240 of them weighed roughly a pound, which is why a pound contained 240 pence until decimalisation in 1971 replaced the old pounds-shillings-pence system with 100 new pence to the pound.
For much of the 19th and early 20th centuries the pound was the world’s premier reserve and trade currency, anchored to gold under the classical gold standard at a fixed $4.86 to the pound. Two world wars, the costs of empire and recurrent balance-of-payments crises gradually eroded that dominance, and the US dollar overtook sterling as the global reserve currency through the 20th century. The pound was devalued in 1949 and again in 1967, floated freely after the collapse of the Bretton Woods system in the early 1970s, and was briefly and painfully tied to European exchange-rate arrangements before exiting the ERM on “Black Wednesday” in 1992. See our GBP/USD history for the pound-dollar story in detail.
The Bank of England
Founded in 1694, the Bank of England is one of the oldest central banks in the world. Since 1997 it has set UK interest rates independently of the government, with the Monetary Policy Committee meeting eight times a year to target 2% inflation. Its rate decisions, and the language of its communications, are the single most important domestic driver of the pound. A fuller profile is on the Bank of England page.
Notes and coins
Coins circulate as 1p, 2p, 5p, 10p, 20p, 50p, £1 and £2. Bank of England banknotes come in £5, £10, £20 and £50 denominations, now printed on polymer. A quirk of the UK system: banknotes are also issued by several Scottish and Northern Irish banks, so a £10 note may carry a bank’s name rather than the Bank of England’s — all are pounds sterling of equal value.
What drives sterling
The pound responds to the gap between Bank of England and Federal Reserve policy, UK inflation data, growth and labour-market releases, the UK’s large current-account deficit, and political events. Because the UK runs a persistent trade deficit and relies on foreign capital inflows, sterling can be sensitive to shifts in global risk appetite — it tends to weaken when investors turn cautious. The full list is in what moves GBP/USD.
Sterling in global markets
Despite the UK being a mid-sized economy, the pound is consistently the fourth most-traded currency in the world (after the dollar, euro and yen), reflecting London’s status as the largest foreign-exchange trading centre. GBP/USD — Cable — is one of the most liquid currency pairs, which keeps its spreads tight for consumers and traders alike.