Pound Sterling (GBP)

The British Pound (GBP) or Pound Sterling, is the currency of the United Kingdom. It is the oldest currency that’s still in use today and is the fourth most-traded currency in the world, after the US Dollar (USD), the Euro (EUR) and the Japanese Yen (JPY).

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Key Info

Currency code: GBP
Currency symbol: £ (Pounds), p (pence)
Nickname: Sterling
Affiliated central bank: Bank of England (BoE)
Key currency pairings: GBP/EUR, GBP/USD, GBP/AUD


Coins: 1p, 2p, 5p, 10p, 20p, 50p, £1, £2
Notes: £5, £10, £20, £50

Where is Pound Sterling Used?

The British Pound is used across the United Kingdom as well as Jersey, Guernsey, and the Isle of Man, as well as many of the British Overseas Territories.

It’s the official currency in Tristan da Cunha, South Georgia and the South Sandwich Islands, and the British Antarctic Territory. It’s universally accepted in Gibraltar and the Falkland Islands. And it’s widely used in Saint Helena, Ascension, and the Pitcairn Islands.

What Affects GBP Exchange Rates?

A variety of things affect GBP exchange rates, and often the factors that impact the Pound are nuanced and require some analysis.

That said, there are three key drivers of movement in Sterling.

Bank of England (BoE)

The Bank of England (BoE) meets every six weeks to set monetary policy for the UK. Most notably, the bank sets interest rates, which determine the cost of borrowing. Generally speaking, when interest rates rise so does the Pound.

Pound Sterling is also affected by what the BoE signals it may do in the future, known as ‘forward guidance’. So, if the bank leaves interest rates unchanged but hints that it might hike in the future, GBP exchange rates will likely strengthen.

Domestic Data Releases

As you can imagine, Pound Sterling tends to strengthen when things are looking good for the UK economy.

The main way that investors gauge the UK’s economic health is through data releases. The most impactful releases are usually the inflation rate, GDP, employment reports, retail sales and the services and manufacturing PMIs. These reports can trigger immediate movement in GBP when they’re published.

Other economic news can also have an impact, such as forecasts or analytical reports from economists.

UK Politics

The Pound is very sensitive to domestic political developments. Investors tend to like certainty, so periods of political instability can weigh on GBP exchange rates.

The Brexit vote, for instance, caused significant movement in the Pound, and continues to do so as the UK navigates its future outside of the EU. Likewise, general elections, political dramas and other newsworthy events can often drive GBP movement.

Latest Pound Sterling News

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