A few examples of banks that are allowed to print the British pound are the Royal Bank of Scotland, the Bank of Ireland, the States of Jersey, and the Government of Gibraltar. There are a few local versions of the pound but there is no guarantee that they will be accepted in England.
The official name of the British currency is pound sterling but it’s usually shortened to just pound in both writing and everyday speech. The currency is also commonly referred to as “quid” within the United Kingdom.
Due to the currency’s short name, there is no real abbreviation of it that is used by everyday people. However, the pound has its own sign just like the dollar and the euro. The sign for the pound is: £ and the ISO 4217 code for the pound sterling is GBP.
In currency trading on the international foreign exchange market (forex market), the pound sterling is sometimes shortened to just sterling or even “ster.” or “stg.”
The name of the pound sterling originates from when a pound was worth one pound in weight of sterling silver. A currency based on the price of silver is called a silver standard.
Nowadays, the currency is a so called fiat money which essentially means that the denominations don’t have an actual physical value. Instead, the pound sterling gets its value from an agreement made between the British government and the rest of the world.
The pound exists in coins and bills based on the following system.
The design of the pound has changed many times throughout history. The current designs have all been introduced in the years after 2011. As we mentioned earlier, there are a few banks in addition to the Bank of England that are allowed to print the British pound and these establishments are also permitted to have their own design on the money. However, the official pound that is printed in England is designed with members of the royal family, famous historical figures, and prominent British scientists on them.
Other Countries with Pound
Just like the American dollar (which you can read more about here), the British pound is not the only currency in the world called a pound. There are a few other countries – usually former British colonies – that are still using their own version of a pound currency. Below you will find a list with some of the countries that are currently using their own pound currency:
- Egypt – Egypt has a currency called the Egyptian pound with the code EGP.
- Lebanon – The currency in Lebanon is called the Lebanese pound and its official code is LBP.
- South Sudan – This is the world’s newest country and they have adopted their own pound. The currency is called the South Sudanese pound and its code is SSP.
- Sudan – Sudan also known as North Sudan is using a currency called the Sudanese pound with the code SDG.
- Syria – Syria is another country using a version of the pound. The currency in Syria is called the Syrian pound and it has the code SYP.
History of the British Pound
GBP is the oldest currency still used in the world today. The pound sterling was introduced as a method of payment between year 500 and 700 by the Anglo Saxon that emigrated to England. They introduced a coinage system that is still the foundation of the modern currency used in the region today.
In 1527, a new currency system was introduced and the currency was named Tower Pound (after the Tower of London) and many experts claim that this is the first time the pound sterling that we know of today was created.
The Bank of England was created in the year 1694 and they were given control over the currency right away. One year later the Bank of Scotland was introduced and it was then that the decision to split the responsibilities over the currency was taken. This was the first time that bills were printed to represent the currency instead of coins that were worth their own weight in silver.
One aspect that makes the pound truly unique is that the currency wasn’t divided into decimals until 1971 when the decimalization came into effect. Instead, the British pound was divided into 20 shillings that could each be split into twelve pence which resulted in a total of 240 pence per pound. It was a system that showed prices in pound, shilling, and pence which created problems whenever the pound was exchanged to a different currency.
We also want to mention that for a long time the British pound co-existed with other currencies in other countries. For example, the GBP was an accepted means of payment with the Canadian dollar in Canada, the New Zealand dollar in New Zealand, and other world currencies.
Pound in Today’s Society
Today the pound is one of the absolute leading currencies in the world. It is also one of the most stable currencies with the highest per-unit-price – 1 GBP = 1,2873 USD and 1 GBP = 1.0943 EUR.
In addition, the pound is also the fourth most traded currency on the forex market, squeezing itself in just after the American dollar, the euro, and the Japanese Yen. GBP is also a so called reserve currency meaning that it’s used for large international transactions and as a safety net for smaller less influential currencies.
Trade the Pound
The interest in converting the pound exchange rate is huge due to the United Kingdom’s popularity as a tourist destination but also due to the investment opportunities it offers for currency trading. The pound also has a unique role in Europe since it is the only European currency that can be compared to the Euro which could have a serious impact on the European economy. Looking for a broker? Try the IQ Option demo account or read the Plus500 review to get started.
Some of the most popular currency pairs to trade GBP with is:
GBP/USD – Because of these two currencies huge influence in the world, they are also a common currency pair to buy and sell. Investors usually focus their trading on stable and predictable currencies, and no currency is more predictable than the British pound and the American dollar.
GBP/EUR – This is an interesting combination thanks to the reason we mentioned above. The two leading currencies in Europe will always attract attention, both on their own and together as a currency pair.
GBP/INR – The British pound and the Indian rupee have had a long tightly knitted relationship as a result of the British colonies in India. It is also common for investors to buy the two currencies together.