The History of GBP: The Great British Pound

The History of GBP: The Great British Pound

  • Posted on 1616-0909-2022
  • by Gareth McCauley

Silver coins were widely used in ancient societies. The earliest known ones were produced in Lydia around the sixth century BCE. The history of monetary systems is pervasive and contains plenty of fascinating facts and stories.

When discussing money and its history, the pound is one of many currencies with a long and storied past. This coin can trace its roots back to continental Europe despite its strong connections with Britishness. The Latin word libra, meaning ‘weight’ or ‘balance’, inspired this currency’s moniker.

Where It Originates From

The name ‘pound’ comes from the Latin phrase ‘libra pondro’, which translates to ‘pound weight’, suggesting that the pound’s origins lie outside Britain.

Although the Latin version has been forgotten, the influence of the pound is still present in the currency symbol (£). In the beginning, its worth was equivalent to a pound of silver; therefore, the similarity with mass was not accidental.

Time of the Anglo-Saxons

It is stated that King Offa, an Anglo-Saxon king, was the one who first brought money to England. He is credited with minting the first silver pennies and having his name inscribed on each one. In reality, there was a significant amount of variation in their weight, and 240 of them rarely added up to 1 pound.

Modern History

After the French defeated the English navy in 1690 at the Battle of Beachy Head, the first central bank in history was established (around 1694). The Bank of England had sole authority over this form of handwritten currency.

In 1717, for the first time, the British government pegged the value of the pound sterling to gold instead of silver. As a result of Germany’s adoption of this philosophy in the 1800s, widespread international trade was fostered for the first time in history.

The Influence of Politics on the Pound

Due to massive borrowing for World War I expenditures beginning in 1914, the United Kingdom experienced devastatingly high inflation.

Consequently, it was required to devalue the pound at the war’s end, to the point where one pound was worth only $4.70. In 1934, after the United States depreciated the dollar a year before, the pound reached its all-time high, with one pound worth five dollars.

World War II

During World War II in 1940, due to various political upheavals, the British government was eventually pressured into devaluing the pound against the dollar, a pattern that continued for several years after that. As a result, £1 was equivalent to $4.03.

The Postwar Era Until the 1990s

A few major changes occurred in the British economy due to the war. They are the following:

  • 1967: The British government declared a 14% devaluation of the pound.
  • 1976: Britain turns to the International Monetary Fund for aid due to high unemployment and inflation.
  • 1985: The pound’s value falls due to international action in the currency markets to weaken the dollar.

Since the Year 1990

The following are the significant events from 1990 to the present:

  • 1992: After Britain left the Exchange Rate Mechanism, the pound’s value fell by more than 20%.
  • 2001: The pound fell nearly 20% due to the bursting of the dot-com boom.
  • 2008: The collapse of Lehman Brothers caused the British pound to plunge by 30%.
  • 2016: The United Kingdom voted to exit the European Union, bringing the worst day ever for the British pound, plunging to a new 30-year low.

The Usual Rates of Exchange

To send money to family and friends back in the United Kingdom, you’ll need to convert British pounds; therefore, it’s essential to know the current exchange rates and pay close attention.

In addition, knowing the current currency rate can help you transfer money to and from the UK at the most advantageous times.

The Current State of the GBP

Presently, banknotes are issued in denominations of £5, £10, £20, and £50. While some £1 notes exist, they are pretty uncommon.

When it comes to coins, the denominations now in circulation include 1, 2, 5, 10, 20, and 50 pennies and 1 and 2 pounds. Special editions of £5 coins are made occasionally; however, the vast majority of the time, their circulation is purely incidental.

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