View source for Pound sterling

{{Short description|Currency of the United Kingdom}}
{{Redirect|GBP|other uses|GBP (disambiguation)}}
{{pp-semi-indef}}
{{Use British English|date=December 2016}}
{{Use dmy dates|date=June 2024}}
{{Infobox currency
| currency_name = Sterling <!-- Yes, just "sterling". The pound is just its primary unit today, in antiquity it was the silver penny. See first sentence of article for more details and evidence. -->
| image_1                   = British 12 sided pound coin.png
| image_title_1             = £1 coin (obverse)
| image_2                   = Bank of England £50 Series G II obverse.jpg
| image_title_2             = Series G II £50 banknote
| iso_code = GBP
| unit = [[Pound (currency)|pound]]
| symbol = [[Pound sign|£]]
| frequently_used_banknotes = {{cslist <!-- Denominations issued by the Bank of England -->
| [[Bank of England £5 note|£5]]
| [[Bank of England £10 note|£10]]
| [[Bank of England £20 note|£20]]
| [[Bank of England £50 note|£50]]{{efn|name=LessCommon|Less common}}}}
| rarely_used_banknotes = {{cslist<!-- Denominations currently issued for circulation by Scottish and Northern Irish banks but not by the Bank of England -->
    | [[The Royal Bank of Scotland £1 note|£1]]{{efn|name=ScotlandAndNI|Scotland and Northern Ireland only}}
    | [[The Royal Bank of Scotland £100 note|£100]]{{efn|name=ScotlandAndNI|Scotland and Northern Ireland only}}
}}
| used_coins = {{cslist <!-- ONLY coins that are actually intended for circulation, i.e., not commemorative or bullion issues -->
    | [[Penny (British decimal coin)|1p]]
    | [[Two pence (British decimal coin)|2p]]
    | [[Five pence (British coin)|5p]]
    | [[Ten pence (British coin)|10p]]
    | [[Twenty pence (British coin)|20p]]
    | [[Fifty pence (British coin)|50p]]
    | [[One pound (British coin)|£1]]
    | [[Two pounds (British coin)|£2]]}}
| subunit_ratio_1 = {{frac|1|100}}
| subunit_name_1 = penny
| plural_subunit_1 = pence
| plural = pounds
| symbol_subunit_1 = p
| date_of_introduction = {{circa}} {{start date and age|df=y|800}}
| using_countries = {{unbulleted list
                               |[[United Kingdom]]
                               |see {{slink||Crown Dependencies and British Overseas Territories}}, below
                              }}
| unofficial_users = 
| issuing_authority = [[Bank of England]]
| issuing_authority_website = {{URL|https://www.bankofengland.co.uk}}
| printer = [[De La Rue]]<ref>{{cite web |title=Our banknotes |url=https://www.bankofengland.co.uk/banknotes |date=31 October 2022 |access-date=28 November 2022 |publisher = Bank of England}}</ref>
| printer_website = {{URL|https://www.delarue.com}}
| mint = [[Royal Mint]]
| mint_website = {{URL|https://www.royalmint.com}}
| pegged_by = see {{slink||Pegged currencies}}
| inflation_rate = 2.8% or 2.0% <!--Please do not use media figures because it is generally unclear which measure they have chosen for click bait -->
| inflation_source_date = [[Office for National Statistics]], 17 July 2024<ref>{{Cite web |date=17 July 2024 |title=Inflation and price indices |url=https://www.ons.gov.uk/economy/inflationandpriceindices/bulletins/consumerpriceinflation/june2024 |publisher=[[Office for National Statistics]] |access-date=17 July 2024 }}</ref>
| inflation_method = [[Consumer Price Index (United Kingdom)#CPIH|CPIH]] or [[Consumer Price Index (United Kingdom)#Introducing CPI|CPI]]
}}

{{Politics of the United Kingdom}}
'''Sterling''' <!--"Sterling" is the official name of this currency. The pound is just its primary unit today, in antiquity it was the penny.--> ([[ISO 4217|ISO code]]: '''GBP''') is the [[currency]] of the [[United Kingdom]] and nine of its associated territories.<ref>{{cite book |title=A Dictionary of Economics |edition=5 |publisher=Oxford University Press |isbn=9780198759430 |url=https://global.oup.com/academic/product/a-dictionary--of-economics-9780198759430?lang=en&cc=gb | first1=Nigar |last1=Hashimzade |first2=Gareth |last2=Myles |first3=John |last3=Black |quote= '''Sterling''': The UK currency. The name originated from the pound Easterling, formerly used in trade with the Baltic. |date=2017}}</ref> The '''pound''' ([[pound sign|sign: £]]) is the main [[unit of account|unit]] of sterling,<ref name="Can Ox D" /> and the word ''[[Pound (currency)|pound]]'' is also used to refer to the British currency generally,<ref name="HbIFT">{{cite book |title=The Handbook of International Financial Terms | first1=Peter |last1=Moles |first2=Nicholas |last2=Terry |isbn= 9780198294818 |date=1999 | url=https://global.oup.com/academic/product/the-handbook-of-international-financial-terms-9780198294818 | quote= '''Sterling (UK).''': The name given to the currency of the United Kingdom (cf. [[Cable (foreign exchange)|cable]]). Also called pound sterling or pounds.}}</ref> often qualified in international contexts as the '''British pound''' or the '''pound sterling'''.<ref name="Can Ox D">{{cite encyclopedia | dictionary=Canadian Oxford Dictionary |edition=2 | title=Pound |quote='''Pound''':2. (in full '''pound sterling''') (pl. same or '''pounds''') the chief monetary unit of the UK and several other countries. |editor-first=Katherine |editor-last=Barber |isbn=9780195418163 |date=2004|publisher=Oxford University Press }}</ref>

Sterling is the world's oldest currency in continuous use since its inception.<ref name="Rendall">{{Cite news |last=Rendall |first=Alasdair |date=12 November 2007 |title=Economic terms explained |work=BBC News |url=http://news.bbc.co.uk/1/hi/programmes/bbc_parliament/7090665.stm |access-date=14 February 2014 |archive-date=3 May 2008 |archive-url=https://web.archive.org/web/20080503031518/http://news.bbc.co.uk/1/hi/programmes/bbc_parliament/7090665.stm |url-status=live }}</ref> In 2022, it was the fourth-most-traded currency in the [[foreign exchange market]], after the [[United States dollar]], the [[euro]], and the [[Japanese yen]].<ref>{{cite web |date=27 October 2022 |title=Triennial Central Bank Survey |url=https://www.bis.org/statistics/rpfx22_fx.pdf |access-date=28 December 2023 |publisher=BIS}}</ref> Together with those three currencies and [[Renminbi]], it forms the [[basket of currencies]] that [[special drawing rights#Value definition|calculate the value]] of [[International Monetary Fund|IMF]] [[special drawing rights]]. As of late 2022, sterling is also the fourth <!-- Citation lists first by the five IMF basket currencies and then by alphabetical, as the source explicitly points out, with the GBP amount clearly FOURTH--> most-held [[reserve currency]] in [[Foreign exchange reserves|global reserves]].<ref name="IMFCOFER">{{cite web |date=23 December 2022 |title=Currency Composition of Official Foreign Exchange Reserves |url=http://data.imf.org/COFER |access-date=31 December 2022 |publisher=[[International Monetary Fund]]  }}</ref>

The [[Bank of England]] is the [[central bank]] for sterling, issuing its own banknotes and regulating issuance of banknotes by private banks in Scotland and Northern Ireland. Sterling banknotes issued by other jurisdictions are not regulated by the Bank of England; their governments [[currency board|guarantee convertibility at par]]. Historically, sterling was also used to varying degrees by the colonies and territories of the [[British Empire]].

==Names==
''Sterling'' is the name of the currency as a whole while ''pound'' and ''penny'' are the units of account. This is analogous to the distinction between ''[[renminbi]]'' and ''[[Yuan (currency)|yuan]]'' when discussing the official currency of the [[People's Republic of China]].

===Etymology===
{{Further|Sterling silver#Etymology}}
There are various theories regarding the origin of the word "sterling". ''[[The Oxford English Dictionary]]'' states that the "most plausible" etymology is a derivation from the [[Old English]] {{lang|ang|steorra}} for "star" with the added [[diminutive]] suffix {{lang|ang|-ling}}, to yield "little star". The reference is to the [[silver penny]] used in [[Norman England]] in the twelfth century, which bore a small star.<ref name="Entry 189985">{{cite encyclopedia |quote=sterling, n.1 and adj.|dictionary=OED Online |date=December 2011 |publisher=Oxford University Press |url=http://www.oed.com/viewdictionaryentry/Entry/189985 |title=Entry 189985 |access-date=28 February 2012 |archive-date=25 June 2015 |archive-url=https://web.archive.org/web/20150625230025/http://www.oed.com/viewdictionaryentry/Entry/189985 |url-status=dead }}</ref>

Another theory holds that the [[Hanseatic League]] was the origin of its definition, manufacture, and name: the German name for the Baltic is {{lang|gml|Ostsee}} ({{gloss|East Sea}}) and from this the Baltic merchants were called {{lang|gml|Osterlings}} ({{gloss|Easterlings}}).<ref>{{cite web |title=Easterling theory |url=http://www.sterlingjudaica.net/easterling-sterling-silver.html |url-status=dead |archive-url=https://web.archive.org/web/20131230235422/http://www.sterlingjudaica.net/easterling-sterling-silver.html |archive-date=30 December 2013 |access-date=19 February 2014 |publisher=Sterling Judaica}}</ref> In 1260, Henry III granted them a charter of protection and land for their [[kontor]], the [[Steelyard|Steelyard of London]], which by the 1340s was also called {{lang|enm|Esterlingeshalle}} ({{gloss|Easterlings Hall}}).<ref>{{Cite book |last=Huffman |first=Joseph P. |url=https://books.google.com/books?id=aFZ9IKWhqxEC&pg=PA33 |title=Family, Commerce, and Religion in London and Cologne |page=33 |date=13 November 2003 |publisher=Cambridge University Press |isbn=9780521521932 |access-date=16 September 2016 |archive-date=7 January 2017 |archive-url=https://web.archive.org/web/20170107070411/https://books.google.com/books?id=aFZ9IKWhqxEC&pg=PA33 |url-status=live }}</ref> Because the League's money was not frequently debased like that of England, English traders stipulated to be paid in pounds of the "Easterlings", which was contracted to "'sterling".<ref>{{Cite book |url=https://books.google.com/books?id=UdGfAAAAMAAJ&pg=PA129 |title=The Journal of the Manchester Geographical Society, Volumes 19–20 |date=1903 |access-date=16 September 2016 |page=129 |archive-date=7 January 2017 |archive-url=https://web.archive.org/web/20170107064925/https://books.google.com/books?id=UdGfAAAAMAAJ&pg=PA129 |url-status=live }}</ref> The OED dismisses this theory as unlikely, since the stressed first syllable would not have been elided.<ref name="Entry 189985" />

[[Encyclopædia Britannica]] states that the (pre-Norman) Anglo-Saxon kingdoms had silver coins called ''sterlings'' and that the compound noun ''pound sterling'' was derived from a pound (weight) of these sterlings.<ref name="britannica1">{{Cite encyclopedia |date=13 August 2013 |title=Pound sterling (money) |url=http://www.britannica.com/EBchecked/topic/473092/pound-sterling |access-date=19 February 2014 |encyclopedia=Encyclopædia Britannica |quote=Silver coins known as 'sterlings' were issued in the Saxon kingdoms, 240 of them being minted from a pound of silver... Hence, large payments came to be reckoned in 'pounds of sterlings', a phrase later shortened... |archive-date=3 December 2013 |archive-url=https://web.archive.org/web/20131203201915/http://www.britannica.com/EBchecked/topic/473092/pound-sterling |url-status=live }}</ref>

The English word ''pound'' derives from the [[Latin language|Latin]] expression {{lang|la|lībra pondō}}, in which {{lang|la|lībra}} is a noun meaning 'pound' and {{lang|la|pondō}} is a noun, in the [[ablative case]], meaning 'by weight'.<ref>{{Cite web |last=Harper |first=Douglas |title=Libra (n.) |url=https://www.etymonline.com/word/libra |url-status=live |archive-url=https://web.archive.org/web/20220602074523/https://www.etymonline.com/word/libra |archive-date=2 June 2022 |website=Online Etymology Dictionary}}</ref><ref>{{Cite web |last=Harper |first=Douglas |title=pound (n.1) |url=https://www.etymonline.com/word/pound |url-status=live |archive-url=https://web.archive.org/web/20220525191519/https://www.etymonline.com/word/pound |archive-date=25 May 2022 |website=Online Etymology Dictionary}}</ref>

===Symbol===
{{main|Pound sign}}
The [[currency sign]] for the pound unit of sterling is {{char|£}}, which (depending on typeface) may be drawn [[pound sign#Double bar style|with one or two bars]]:<ref name="BoE-FoI">{{cite web |title=History of the use of the single crossbar pound sign on Bank of England's banknotes |url=https://www.bankofengland.co.uk/freedom-of-information/2022/history-of-the-use-of-the-single-crossbar-pound-sign-on-banknotes |publisher=Bank of England |access-date=13 April 2022 |archive-date=25 March 2022 |archive-url=https://web.archive.org/web/20220325080653/https://www.bankofengland.co.uk/freedom-of-information/2022/history-of-the-use-of-the-single-crossbar-pound-sign-on-banknotes |url-status=live }}</ref> the Bank of England has exclusively used the single bar variant since 1975.<ref name="BoEoldnotes">{{cite web |title=Withdrawn banknotes |url=https://www.bankofengland.co.uk/banknotes/withdrawn-banknotes |access-date=13 September 2019 |publisher=[[Bank of England]] |archive-date=15 January 2019 |archive-url=https://web.archive.org/web/20190115092327/https://www.bankofengland.co.uk/banknotes/withdrawn-banknotes |url-status=live }} ("£1 1st Series Treasury Issue" to "£5 Series B")</ref><ref>{{cite web |title=Current banknotes |url=https://www.bankofengland.co.uk/banknotes/current-banknotes |access-date=8 November 2019 |publisher=[[Bank of England]] |archive-date=4 December 2019 |archive-url=https://web.archive.org/web/20191204081441/https://www.bankofengland.co.uk/banknotes/current-banknotes |url-status=live }}</ref> Historically, a simple capital {{char|L}} (in the historic [[blackletter|black-letter]] typeface, <math>\mathfrak{L}</math>) placed before the numerals, or an italic <span style="border:1px solid #ddd; background:#fdfdfd; padding:1px; font-family:serif;">''l.''</span> after them, was used in newspapers, books and letters.<ref>For example,{{cite web |last=Samuel Pepys |date=2 January 1660 |title=Diary of Samuel Pepys/1660/January |url=https://en.wikisource.org/wiki/Diary_of_Samuel_Pepys/1660/January |access-date=23 September 2019 |archive-date=23 September 2019 |archive-url=https://web.archive.org/web/20190923210619/https://en.wikisource.org/wiki/Diary_of_Samuel_Pepys/1660/January |url-status=live |quote=Then I went to Mr. Crew's and borrowed L10 of Mr. Andrewes for my own use, and so went to my office, where there was nothing to do}}</ref> The [[Royal Mint]] was still using this style of notation as late as 1939.<ref>{{cite web |last=His Majesty's Stationery Office |date=10 July 1939 |title=Royal Mint Annual Report 1938 Volume No.69 |url=https://library.royalmintmuseum.org.uk/archive/royal-mint-annual-reports/royal-mint-annual-report-1938-volume-no69/1798041 |access-date=30 June 2022 |quote=Some 58,000,000<span style="font-family: serif;">''l''</span> of silver coin of the old fineness, comprising over a thousand million pieces, have already been withdrawn from circulation. |archive-date=17 August 2022 |archive-url=https://web.archive.org/web/20220817181544/https://library.royalmintmuseum.org.uk/archive/royal-mint-annual-reports/royal-mint-annual-report-1938-volume-no69/1798041 |url-status=live }}</ref> The glyphs {{char|[[Ł]]}} and {{char|[[Ⱡ]]}} may occasionally be encountered.<ref>see for example [[commons:File:Art detail, stock certificate - Barnum & Bailey 1902 (cropped).jpg|Barnum and Bailey share certificate (early 20th century)]]</ref> Use of the letter {{angbr|L}} for pound derives from medieval Latin documents: "L" was the abbreviation for {{lang|la|[[Roman units of weight|libra]]}}, the [[Roman pound]] (weight), which in time became an [[Kingdom of England|English]] unit of weight defined as the [[Pound (weight)#Tower pound|tower pound]]. A "pound sterling" was literally a tower pound (weight) of [[sterling silver]].<ref name="ViewOfCoinage">{{Cite book |last=Thomas Snelling |url=https://archive.org/details/bub_gb_12AGAAAAQAAJ |title=A View of the Silver Coin and Coinage of England from the Norman Conquest to the Present Time |date=1762 |publisher=T. Snelling |page=ii |access-date=19 September 2016}}</ref><ref>{{cite web |title=A brief history of the pound |url=http://www.dozenalsociety.org.uk/history/poundhist.html |access-date=14 January 2011 |publisher=The Dozenal Society of Great Britain |archive-date=12 November 2020 |archive-url=https://web.archive.org/web/20201112000041/http://www.dozenalsociety.org.uk/history/poundhist.html |url-status=live }}</ref> In the British pre-decimal ([[duodecimal]]) currency system, the term [[£sd]] (or Lsd) for pounds, [[shilling]]s and [[penny|pence]] referred to the Roman {{lang|la|libra}}, ''[[solidus (coin)|solidus]]'', and ''[[denarius]]''.<ref name="britannica1" />

Notable style guides recommend that the pound sign be used without any abbreviation or qualification to indicate sterling (e.g., £12,000).<ref>{{cite web |title = ILO House style manual |publisher = [[International Labour Organization]] |url = https://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_742229.pdf |access-date = 25 June 2022 |archive-date = 17 May 2022 |archive-url = https://web.archive.org/web/20220517223204/http://www.ilo.org/wcmsp5/groups/public/---ed_norm/---relconf/documents/meetingdocument/wcms_742229.pdf |url-status = live }}</ref><ref>{{cite web |title=WHO style guide |publisher=[[World Health Organization]] |url=https://www.unaids.org/sites/default/files/sg13_web_v4%20pdf%20-%20adobe%20reader.pdf |access-date=25 June 2022 |archive-date=14 September 2021 |archive-url=https://web.archive.org/web/20210914013949/https://www.unaids.org/sites/default/files/sg13_web_v4%20pdf%20-%20adobe%20reader.pdf |url-status=live }}</ref><ref>{{cite web |title=Style guide for authors and editors |publisher=[[Bloomsbury Publishing|Bloomsbury Academic]] |url=https://media.bloomsbury.com/rep/files/ba-house-style-for-authors-and-editorssept16.pdf |access-date=25 June 2022 |archive-date=26 June 2021 |archive-url=https://web.archive.org/web/20210626002418/https://media.bloomsbury.com/rep/files/ba-house-style-for-authors-and-editorssept16.pdf |url-status=live }}</ref> The [[ISO 4217]] code "GBP" (e.g., GBP&nbsp;12,000 or 12,000&nbsp;GBP) may also be seen should disambiguation become necessary.

===Currency code===
The [[ISO 4217]] currency code for sterling is "GBP",<ref>{{cite web |title= Maintenance Agency {{!}} ISO 4217 – Currency Code Maintenance: Get the Correct Currency Code {{!}} List One |url=https://www.six-group.com/en/products-services/financial-information/data-standards.html#scrollTo=maintenance-agency |publisher=SIX Group }} (The official list of ISO 4217 alphabetic and numeric codes)</ref> formed from the [[ISO 3166-1 alpha-2]] code for the United Kingdom ("GB") and the first letter of "pound".<ref>{{cite web |url=https://www.iso.org/iso-4217-currency-codes.html |url-access= |title=ISO 4217 - Currency Codes |author=Staff writer |year=2015 |website=www.iso.org |agency=International Organisation for Standardisation |access-date=27 June 2022 |url-status= |archive-url= |archive-date= |quote=The alphabetic code is based on another ISO standard, ISO&nbsp;3166, which lists the codes for country names. The first two letters of the ISO&nbsp;4217 three-letter code are the same as the code for the country name, and, where possible, the third letter corresponds to the first letter of the currency name.}}</ref> <!--The terms "Great British Pound" and "Great Britain Pound" are erroneous backronyms with no status. Please do not bother to add either as it will be deleted. --> 
In historical sources and some specialist banking uses, the abbreviation '''stg''' (in various styles) has been used to indicate sterling.<ref name="Leach">{{cite book |title=Leach's Tax Dictionary |page=838 |isbn=9781913507190 |location=London |publisher=Spiramus Press Ltd |year=2021 |first=Robert |last=Leach |chapter=Section 2: Abbreviations |chapter-url=https://books.google.com/books?id=C_AhEAAAQBAJ&pg=PA838 |access-date=22 June 2022 |archive-date=17 August 2022 |archive-url=https://web.archive.org/web/20220817181528/https://www.google.co.uk/books/edition/Leach_s_Tax_Dictionary/C_AhEAAAQBAJ?hl=en&gbpv=1&pg=PA838 |url-status=live }}</ref><ref>{{cite web |url=https://www.swift.com/sites/default/files/files/chaps-getting-started-guide_v1_0.pdf|title=CHAPS ISO 20022 over SWIFT |publisher=[[SWIFT]] |date=2021}}</ref> Many stocks on the [[London Stock Exchange]] are quoted in penny sterling, using the unofficial code "GBX".<ref>{{Cite web |title=What does GBX mean when buying stocks on the London Stock Exchange? |url=https://www.degiro.cz/helpdesk/orders/what-does-gbx-mean-when-buying-stocks-london-stock-exchange |access-date=2023-12-08 |website=[[DEGIRO]]}}</ref>

===Cable===
{{Main|Cable (foreign exchange)}}
The exchange rate of sterling against the [[US dollar]] is referred to as "cable" in the wholesale [[foreign exchange market]]s.<ref>{{Cite news |url=https://www.ft.com/content/47c32ec4-6a34-11e4-8fca-00144feabdc0 |title=Traders' forex chatroom banter exposed |newspaper=[[Financial Times]] |first1=Claer |last1=Barrett |first2=John |last2=Aglionby |date=12 November 2014 |quote=A trader from HSBC visits multiple chatrooms in an attempt to manipulate the 4pm WMR fix, declaring he is a net seller in "cable" (a slang term for GBP/USD currency pairing) |access-date=18 February 2022 |archive-date=18 February 2022 |archive-url=https://web.archive.org/web/20220218141204/https://www.ft.com/content/47c32ec4-6a34-11e4-8fca-00144feabdc0 |url-status=live }}</ref> The origins of this term are attributed to the fact that from the mid-19th century, the sterling/dollar exchange rate was transmitted via transatlantic cable.<ref>{{Cite news|url=https://www.nytimes.com/1931/09/22/archives/sterling-cable-rates-319-to-7-since-1914-top-reached-when-war.html|title=STERLING CABLE RATES $3.19 TO $7 SINCE 1914; Top Reached When War Started and Bottom on Feb. 3, 1920, as Support Stopped|date=22 September 1931|newspaper=[[New York Times]]|access-date=18 February 2022|archive-date=5 January 2022|archive-url=https://web.archive.org/web/20220105215929/https://www.nytimes.com/1931/09/22/archives/sterling-cable-rates-319-to-7-since-1914-top-reached-when-war.html|url-status=live}}</ref>

===Slang terms <span class="anchor" id="quid (slang)"></span>===
Historically almost every British coin had a widely recognised nickname, such as "tanner" for the [[Sixpence (British coin)|sixpence]] and "bob" for the [[Shilling (British coin)|shilling]].<ref name=UON>{{cite web |url=https://www.nottingham.ac.uk/manuscriptsandspecialcollections/researchguidance/weightsandmeasures/money.aspx |title=University of Nottingham ''Manuscripts and Special Collections'' 'Research Guidance' Weights and Measures § Money |access-date=12 March 2014 |archive-date=12 March 2014 |archive-url=https://web.archive.org/web/20140312080731/http://www.nottingham.ac.uk/manuscriptsandspecialcollections/researchguidance/weightsandmeasures/money.aspx |url-status=live }}</ref> Since decimalisation these have mostly fallen out of use except as parts of proverbs.

A common<ref name="slang">{{Cite web |url=https://www.sunnyavenue.co.uk/insight/why-is-it-called-a-quid-history-of-the-quid |title=Why is it called a quid? History of the Quid |date=2023-08-30 |access-date=2024-01-18 |website=Sunny Avenue |last=Crispe |first=Stuart}}</ref> slang term for the pound unit is "'''quid'''" (singular and plural, except in the common phrase "quids in").<ref>{{cite web |title=Quid {{!}} Definition of Quid by Oxford Dictionary on Lexico.com also meaning of Quid |url=https://www.lexico.com/definition/quid |access-date=11 June 2020 |website=Lexico Dictionaries {{!}} English |language=en |archive-date=11 June 2020 |archive-url=https://web.archive.org/web/20200611103435/https://www.lexico.com/definition/quid |url-status=dead }}</ref> The term may have come via Italian immigrants from {{lang|it|[[Italian scudo|scudo]]}}, the name for a number of currency units used in Italy until the 19th century; or from Latin {{lang|la|quid}} via the common phrase ''[[quid pro quo]]'', literally, "what for what", or, figuratively, "An equal exchange or substitution".<ref>The American Heritage Dictionary of the English Language, Third Edition. Houghton Mifflin. 20 August 1993.</ref> The term "nicker" (also both singular and plural) may also refer to the pound.<ref name=slang />

==Crown Dependencies and British Overseas Territories==
The currency of all the [[Crown Dependencies]] ([[Bailiwick of Guernsey|Guernsey]], [[Jersey]], [[Isle of Man]]) and most [[British Overseas Territories]] ([[British Antarctic Territory]];<ref>{{cite web |title=British Antarctic Territory Currency Ordinance 1990 |url=https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/478254/The_Currency_Ordinance_1990.odt |access-date=13 June 2019 |archive-date=12 April 2021 |archive-url=https://web.archive.org/web/20210412083004/https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/478254/The_Currency_Ordinance_1990.odt |url-status=live }}</ref><ref>{{cite web |date=25 March 2010 |title=Foreign and Commonwealth Office country profiles: British Antarctic Territory |url=http://www.fco.gov.uk/en/about-the-fco/country-profiles/south-america/british-antarctic-territory |url-status=dead |archive-url=https://web.archive.org/web/20090420013058/http://www.fco.gov.uk/en/about-the-fco/country-profiles/south-america/british-antarctic-territory/ |archive-date=20 April 2009 |access-date=17 April 2010 |publisher=British Foreign & Commonwealth Office}}</ref>  [[Falkland Islands]] and [[South Georgia and the South Sandwich Islands]]; [[Gibraltar]]; [[Saint Helena]], [[Ascension Island]] and [[Tristan da Cunha]])<ref>{{cite web | url=https://www.gov.uk/foreign-travel-advice/st-helena-ascension-and-tristan-da-cunha/money | title=Money - St Helena, Ascension and Tristan da Cunha travel advice }}</ref> is either sterling or [[currency peg|pegged]] to sterling at par.

Some British Overseas Territories have a local currency that is [[currency peg|pegged]] to the [[U.S. dollar]] or the [[New Zealand dollar]]. The [[Akrotiri and Dhekelia|Sovereign Base Areas of Akrotiri and Dhekelia]] (in [[Cyprus]]) use the euro.

==Subdivisions and other units==
===Decimal coinage===

Since [[decimalisation]] on [[Decimal Day]] in 1971, the pound has been divided into 100 pence (denoted on coinage, until 1981, as "new pence"). The symbol for the penny is "p"; hence an amount such as 50p (£0.50) properly pronounced "fifty pence" is often pronounced "fifty pee" /fɪfti piː/. The old sign ''d'' was not reused for the ''new penny'' in order to avoid confusion between the two units. A decimal [[Halfpenny (British decimal coin)|halfpenny]] ({{sfrac|2}}p, worth 1.2 old pennies) was issued until 1984 but was [[Withdrawal of low-denomination coins|withdrawn due to inflation]].<ref>{{Cite news |last=<!--Staff writer(s); no by-line.--> |date=2008 |title=1984: Halfpenny coin to meet its maker |work=BBC News |url=http://news.bbc.co.uk/onthisday/hi/dates/stories/february/1/newsid_2828000/2828819.stm |access-date=14 February 2014 |archive-date=18 February 2015 |archive-url=https://web.archive.org/web/20150218211548/http://news.bbc.co.uk/onthisday/hi/dates/stories/february/1/newsid_2828000/2828819.stm |url-status=live }}</ref>

===Pre-decimal===
{{Infobox currency
| currency_name = Sterling<br>{{small|(pre-decimal)}}
| image_1 = File:British pre-decimal penny 1967 reverse.png
| image_title_1 = 1''[[Penny (British pre-decimal coin)|d]]'' coin issued in 1967
| image_2 = File:British_shilling_1963_reverse.png
| image_title_2 = 1''[[Shilling (British coin)|s]]'' coin issued in 1963
| unit = [[Pound (currency)|pound]]
| superunit_ratio_1 = 1.05
| superunit_name_1 = [[Guinea (coin)|Guinea]]
| subunit_name_1 = [[Shilling (British coin)|Shilling]]
| subunit_name_2 = [[Penny (British pre-decimal coin)|Penny]]
| symbol = £
| symbol_subunit_1 = ''s'' or /
| symbol_subunit_2 = ''d''
| subunit_ratio_1 = {{frac|1|20}}
| subunit_ratio_2 = {{frac|1|240}}
| plural = Pounds
| plural_subunit_1 = Shillings
| plural_subunit_2 = Pence
| banknote_article = Banknotes of the pound sterling
| coin_article = Coins of the pound sterling
| frequently_used_banknotes = {{cslist|[[Bank of England 10 shilling note|10/–]]|[[Bank of England £1 note|£1]]|[[Bank of England £5 note|£5]]}}
| rarely_used_banknotes = {{cslist|[[Bank of England £10 note|£10]]|[[Bank of England £20 note|£20]]|[[Bank of England £50 note|£50]]|£100|£200|£500|£1,000<ref name=BoEoldnotes />}}
| used_coins = {{cslist|{{frac|1|4}}''d''|{{frac|1|2}}''d''|1''d''|3''d''|6''d''|1/–|2/–|2/6|5/–}}
| obsolete = 15 February 1971
}}
{{Main|£sd}}{{further|Coins of the pound sterling|List of British banknotes and coins}}

[[File:De Alice's Abenteuer im Wunderland Carroll pic 25.jpg|thumb|left|[[The Hatter]]'s hat shows an example of the old pre-decimal notation: the hat costs [[Shilling (British coin)|10/]]6 (ten shillings and sixpence, a [[half guinea]]).]]

Before [[£sd#Decimalisation|decimalisation in 1971]], the pound was divided into 20 [[British shilling coin|shillings]], and each shilling into 12 [[Old penny sterling|pence]], making 240 pence to the pound. The symbol for the shilling was "''s''."{{snd}} not from the first letter of "shilling", but from the Latin ''[[solidus (coin)|solidus]]''. The symbol for the penny was "''d''.", from the French ''denier'', from the Latin ''[[denarius]]'' (the solidus and denarius were Roman coins). A mixed sum of shillings and pence, such as 3 shillings and 6 pence, was written as "3/6" or "3''s''. 6''d''." and spoken as "three and six" or "three and sixpence" except for "1/1", "2/1" etc., which were spoken as "one and a penny", "two and a penny", etc. 5 shillings, for example, was written as "5''s''." or, more commonly, "5/–" (five shillings, no pence).
Various coin denominations had, and in some cases continue to have, special names, such as [[florin (British coin)|florin]] (2/–), [[crown (British coin)|crown]] (5/–), [[half crown (British coin)|half crown]] (2/6''d''), [[farthing (British coin)|farthing]] ({{frac|1|4}}''d''), [[sovereign (British coin)|sovereign]] (£1) and [[guinea (British coin)|guinea]] (21s, 21/–, £1–1–0 or £1.05 in decimal notation).

By the 1950s, coins of Kings [[George III of the United Kingdom|George&nbsp;III]], [[George IV of the United Kingdom|George&nbsp;IV]] and [[William IV of the United Kingdom|William&nbsp;IV]] had disappeared from circulation, but coins (at least the penny) bearing the head of every British monarch from [[Queen Victoria]] onwards could be found in circulation. Silver coins were replaced by those in [[cupro-nickel]] in 1947, and by the 1960s the silver coins were rarely seen. Silver/cupro-nickel sixpences, shillings (from any period after 1816) and [[Florin (British coin)|florin]]s (2 shillings) remained legal tender after decimalisation (as 2½p, 5p and 10p respectively) until 1980, 1990 and 1993 respectively, but are now officially demonetised.<ref>{{cite web|title=Shilling|url=https://www.royalmintmuseum.org.uk/journal/curators-corner/shilling/|url-status=live|archive-url=https://web.archive.org/web/20210921210542/https://www.royalmintmuseum.org.uk/journal/curators-corner/shilling/|archive-date=21 September 2021|access-date=23 September 2021|website=The Royal Mint Museum}}</ref><ref>{{cite web |title=Florin |url=http://www.royalmintmuseum.org.uk/coins/british-coinage/old-denominations/florin/index.html |archive-url=https://web.archive.org/web/20150227195515/http://www.royalmintmuseum.org.uk/coins/british-coinage/old-denominations/florin/index.html |url-status=dead |archive-date=27 February 2015 |access-date=11 September 2019 |website=The Royal Mint Museum}}</ref>

{{clear}}

==History (600–1945)==
{{anchor|History}} <!-- previous section title-->
[[File:The Pound.jpg|thumb|right|A pound = 20 [[shilling]]s = 240 [[Silver penny|silver pennies]] (formerly)]]
The pound sterling emerged after the adoption of the [[French livre|Carolingian monetary system]] in England {{circa|800}}. Here is a summary of changes to its value in terms of silver or gold until 1816.<ref name="History1300">{{cite web |last=Shaw |first=William Arthur |date=13 May 1896 |title=The History of Currency, 1252–1894: Being an Account of the Gold and Silver Moneys and Monetary Standards of Europe and America, Together with an Examination of the Effects of Currency and Exchange Phenomena on Commercial and National Progress and Well-being |url=https://books.google.com/books?id=GrJCAAAAIAAJ&pg=PA44 |publisher=Putnam |via=Google Books |access-date=12 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512150410/https://books.google.com/books?id=GrJCAAAAIAAJ&pg=PA44 |url-status=live }}</ref><ref name="History1500">{{cite web |last=Shaw |first=William Arthur |date=13 May 1896 |title=The History of Currency, 1252–1894: Being an Account of the Gold and Silver Moneys and Monetary Standards of Europe and America, Together with an Examination of the Effects of Currency and Exchange Phenomena on Commercial and National Progress and Well-being |url=https://books.google.com/books?id=GrJCAAAAIAAJ&pg=PA113 |publisher=Putnam |via=Google Books |access-date=12 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512084753/https://books.google.com/books?id=GrJCAAAAIAAJ&pg=PA113 |url-status=live }}</ref>

{| class="wikitable sortable" style="text-align: right;"
|+ Value of £1 sterling in grams and troy ounces
! rowspan="2" | Year 
! colspan="2" | Silver
! colspan="2" | Gold
|-
! Grams !! Troy ounces !! Grams !! Troy ounces
|-
| 800 || {{convert|349.9|g|ozt|abbr=on|disp=table}} || – || –
|-
| 1158 || {{convert|323.7|g|ozt|abbr=on|disp=table}} || – || –
|-
| 1351 || {{convert|258.9|g|ozt|abbr=on|disp=table}} || {{convert|23.21|g|ozt|abbr=on|disp=table}}
|-
| 1412 || {{convert|215.8|g|ozt|abbr=on|disp=table}} || {{convert|20.89|g|ozt|abbr=on|disp=table}}
|-
| 1464 || {{convert|172.6|g|ozt|abbr=on|disp=table}} || {{convert|15.47|g|ozt|abbr=on|disp=table}}
|-
| 1551 || {{convert|115.1|g|ozt|abbr=on|disp=table}} || {{convert|10.31|g|ozt|abbr=on|disp=table}}
|-
| 1601 || {{convert|111.4|g|ozt|abbr=on|disp=table}} || colspan="2" style="text-align:center;" | ''variable''
|-
| 1717 || {{convert|111.4|g|ozt|abbr=on|disp=table}} || {{convert|7.32238|g|ozt|abbr=on|disp=table}}
|-
| 1816 || – || – || {{convert|7.32238|g|ozt|abbr=on|disp=table}}
|}

===Anglo-Saxon===
<!--[[Anglo-Saxon pound]] redirects here. If changing this section title, please revise that redirect to match. -->
{{more citations needed|section|date=July 2021}}
{{see also|History of the English penny (c. 600 – 1066)}}
[[File:Offa king of Mercia 757 796.jpg|thumb|upright 0.5|[[King Offa]] penny (eighth century)<ref>{{cite web |title=Coin |publisher=[[British Museum]] |url=https://www.britishmuseum.org/collection/object/C_E-5736 |access-date=5 July 2021 |archive-date=9 July 2021 |archive-url=https://web.archive.org/web/20210709182741/https://www.britishmuseum.org/collection/object/C_E-5736 |url-status=live }}</ref>]]
The pound was a unit of account in [[History of Anglo-Saxon England|Anglo-Saxon England]]. By the ninth century it was equal to 240 silver [[History of the English penny (c. 600-1066)|pence]].<ref>{{cite encyclopedia|last=Naismith |first=Rory |title= Coinage|page=330 |year=2014b|editor1-first= Michael|editor1-last= Lapidge|editor2-first= John|editor2-last= Blair|editor3-first= Simon|editor3-last= Keynes |editor4-first= Donald|editor4-last= Scragg |encyclopedia=The Wiley Blackwell Encyclopedia of Anglo-Saxon England|edition=Second|location=Chichester, UK|publisher= Blackwell Publishing|isbn=978-0-470-65632-7}}</ref>

The accounting [[£sd|system of dividing]] one pound into twenty [[shilling]]s, a shilling into twelve pence, and a penny into four [[Farthing (British coin)|farthings]] was adopted{{when|date=July 2021}} from the [[livre carolingienne]] system introduced by [[Charlemagne]] to the [[Francia|Frankish Empire]].{{citation needed|date=July 2021}} The penny was abbreviated to "d", from ''[[denarius]]'', the Roman equivalent of the penny; the shilling to "s" from [[Solidus (coin)|solidus]] (written with a [[long s]], {{char|ſ}}, later evolving into a simple [[slash (punctuation)|slash]], {{char|/}}); and the pound to "L" (subsequently [[pound symbol|£]]) from ''[[Roman units of weight|Libra]]'' or ''[[French livre|Livre]]''.{{when|date=July 2021}}

The origins of sterling lie in the reign of [[Offa of Mercia|King Offa of Mercia]] (757–796), who introduced a "sterling" coin made by physically dividing a [[Tower pound]] (5,400 grains, 349.9 grams) of silver into 240 parts.<ref>{{cite encyclopedia |encyclopedia=Britannica |title=Pound sterling |url=https://www.britannica.com/topic/pound-sterling |quote="Silver coins known as "sterlings" were issued in the Saxon kingdoms, 240 of them being minted from a pound of silver... Hence, large payments came to be reckoned in "pounds of sterlings," a phrase later shortened..." |access-date=22 July 2021 |archive-date=16 June 2008 |archive-url=https://web.archive.org/web/20080616065649/http://www.britannica.com/eb/article-9061103/pound-sterling |url-status=live }}</ref> In practice, the weights of the coins were not consistent, 240 of them seldom added up to a full pound; there were no shilling or pound coins and these units were used only as an [[Unit of account|accounting convenience]].<ref>{{cite web |title=A short history of the pound |publisher=BBC |first=Ed |last=Lowther |date=14 February 2014 |work=BBC News |url=https://www.bbc.co.uk/news/uk-politics-26169070 |quote=Anglo-Saxon [[Offa of Mercia|King Offa]] is credited with introducing the system of money to central and southern England in the latter half of the eighth century, overseeing the minting of the earliest English silver pennies{{snd}}emblazoned with his name. In practice they varied considerably in weight and 240 of them seldom added up to a pound. There were at that time no larger denomination coins{{snd}} pounds and [[shilling]]s were merely useful units of account. |access-date=22 July 2021 |archive-date=21 July 2021 |archive-url=https://web.archive.org/web/20210721233848/https://www.bbc.co.uk/news/uk-politics-26169070 |url-status=live }}</ref>

[[Halfpenny (British pre-decimal coin)|Halfpennies]] and [[Farthing (English coin)|farthings]] worth {{frac|1|2}} and {{frac|1|4}} penny respectively were also minted, but small change was more commonly produced by cutting up a whole penny.<ref>{{cite web |title=Halfpenny and Farthing |url=https://www.royalmintmuseum.org.uk/journal/curators-corner/halfpenny-and-farthing/ |website=www.royalmintmuseum.org.uk |access-date=12 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512054418/https://www.royalmintmuseum.org.uk/journal/curators-corner/halfpenny-and-farthing/ |url-status=live }}</ref>

===Medieval, 1158===
[[File:England longcross penny Henry III Canterbury mint.jpg|thumb|Penny of Henry III, 13th century]]
The early pennies were struck from fine silver (as pure as was available). [[History of the English penny (1154–1485)|In 1158, a new coinage]] was introduced by King [[Henry II of England|Henry II]] (known as the ''[[History of the English penny (1154–1485)|Tealby penny]]''), with a Tower Pound (5,400 grains, 349.9 g) of 92.5% silver minted into 240 pennies, each penny containing 20.82 grains (1.349 g) of fine silver.<ref name="History1300" /> Called [[sterling silver]], the alloy is harder than the 99.9% [[fine silver]] that was traditionally used, and sterling silver coins did not wear down as rapidly as fine silver ones.

The introduction of the larger French ''[[:fr:Gros tournois|gros tournois]]'' coins in 1266, and their subsequent popularity, led to additional denominations in the form of [[Groat (coin)|groats]] worth four pence and [[Twopence (British pre-decimal coin)|half groats]] worth two pence.<ref name="old denoms">{{cite web |title=Coins of the Kings and Queens of England and Great Britain |quote=2d, 4d issued since 1347 |publisher=Treasure Realm |url=https://www.treasurerealm.com/coinpapers/england/coinmatrix.html |access-date=13 May 2021 |archive-date=21 April 2021 |archive-url=https://web.archive.org/web/20210421123241/http://www.treasurerealm.com/coinpapers/england/coinmatrix.html |url-status=live }}</ref> A [[gold penny]] weighing twice the silver penny and valued at 20 silver pence was also issued in 1257 but was not successful.<ref>{{cite book |title=A View Of The Gold Coin And Coinage Of England: From Henry The Third To the Present Time. Consider'd with Regard to Type, Legend, Sorts, Rarity, Weight, Fineness, Value and Proportion |first=Thomas |last=Snelling |date=1763 |quote=The manuscript chronicle of the city of London says this king Henry III in 1258 coined a penny of fine gold of the weight of two sterlings and commanded it should go for 20 shillings if this be true these were the first pieces of gold coined in England NB The date should be 1257 and the value pence |url=https://books.google.com/books?id=QZRMAAAAcAAJ&pg=PR1 |access-date=19 July 2021 |archive-date=4 September 2021 |archive-url=https://web.archive.org/web/20210904114340/https://books.google.com/books?id=QZRMAAAAcAAJ&pg=PR1 |url-status=live }}</ref>

The English penny remained nearly unchanged from 800 and was a prominent exception in the progressive debasements of coinage which occurred in the rest of Europe. The Tower Pound, originally divided into 240 pence, devalued to 243 pence by 1279.<ref name="240pence">{{cite web |page=10 |quote=240–243 pennies minted from a Tower Pound. |title=MONEY AND COINAGE IN LATE MEDIEVAL AND EARLY MODERN EUROPE |first=John |last=Munro |publisher=Department of Economics, [[University of Toronto]] |url=https://www.economics.utoronto.ca/munro5/MONEYLEC.pdf |access-date=12 May 2021 |archive-date=6 April 2021 |archive-url=https://web.archive.org/web/20210406163641/https://www.economics.utoronto.ca/munro5/MONEYLEC.pdf |url-status=live }}</ref>

===Edward III, 1351===
[[File:Edward III noble.jpg|thumb|right|Edward III noble (80 pence), 1354–55]]
During the reign of [[Edward III of England|King Edward III]], the introduction of gold coins received from [[County of Flanders|Flanders]] as payment for English wool provided substantial economic and trade opportunities but also unsettled the currency for the next 200 years.<ref name="History1300" />{{rp|41}} The first monetary changes in 1344 consisted of
* English pennies reduced to {{frac|20|1|4}} grains ({{convert|20.25|gr|g ozt|3|disp=out}}) of sterling silver (or {{nowrap|1= 20.25gr @ 0.925 fine = 18.73 gr}} pure silver) and
* Gold [[Florin (English coin)|double florins]] weighing {{cvt|108|gr|g ozt|3}} and valued at 6 shillings (or 72 pence).<ref name="History1300" /> (or {{nowrap|1= 108gr @ 0.9948 fine = 107.44 gr}} pure gold).

The resulting gold-silver ratio of 1:12.55 was much higher than the ratio of 1:11 prevailing in the Continent, draining England of its silver coinage and requiring a more permanent remedy in 1351 in the form of
* Pennies reduced further to {{cvt|18|gr|g ozt}} of sterling silver (or {{nowrap|1= 18 @ 0.925 fine = 15.73 gr}} pure silver) and
* New [[Noble (English coin)|gold nobles]] weighing {{convert|120|gr|g ozt|abbr=off|3}} of the finest gold possible at the time (191/192 or 99.48% fine),<ref name="Noble">{{cite web |title=Content and Fineness of the Gold Coins of England and Great Britain: Henry III – Richard III (1257–1485) |quote=Fineness 23.875 karats = 191/192, coins in Nobles, Halves, Quarters |url=https://www.treasurerealm.com/coinpapers/england/englishgold-1.html |website=treasurerealm.com |access-date=12 May 2021 |archive-date=20 October 2020 |archive-url=https://web.archive.org/web/20201020121107/http://www.treasurerealm.com/coinpapers/england/englishgold-1.html |url-status=live }}</ref> (meaning {{nowrap|1= 120gr @ 0.9948 fine = 119.38 gr}} pure gold) and valued at 6 shillings and 8 pence (80 pence, or {{frac|1|3}}rd of a pound). The pure gold-silver ratio was thus {{nobr|1:(80 × 15.73 / 119.38) {{=}} 1:10.5}}.

These gold nobles, together with half-nobles (40 pence) and farthings or quarter-nobles (20 pence),<ref name="Noble" /> became the first English gold coins produced in quantity.<ref>{{cite web |title=Noble (1361–1369) ENGLAND, KINGDOM – EDWARD III, 1327–1377 – n.d., Calais Wonderful coin with fine details. Very impressive. |url=https://www.ma-shops.com/henzen/item.php?id=41313&curr=USD |website=MA-Shops |access-date=12 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512043517/https://www.ma-shops.com/henzen/item.php?id=41313&curr=USD |url-status=live }}</ref>

===Henry IV, 1412===
The exigencies of the [[Hundred Years' War]] during the reign of [[Henry IV of England|King Henry IV]] resulted in further debasements toward the end of his reign, with the English penny reduced to 15 grains sterling silver (0.899 g fine silver){{clarify|reason=how fine is "fine"? .9? .99? . 999? .9999?|date=October 2022}} and the half-noble reduced to 54&nbsp;grains (3.481&nbsp;g fine gold).{{clarify|reason=how fine is "fine"? .9? .99? . 999? .9999?|date=October 2022}}<ref name="History1300" /> The gold-silver ratio went down to {{nobr|40 × 0.899 / 3.481 {{=}} 10.3}}.

After the [[French franc#Lancastrian War, 1425|French monetary reform of 1425]], the gold half-noble ({{frac|1|6}}th pound, 40 pence) was worth close to one [[French franc#History|Livre Parisis (French pound)]] or 20 sols, while the silver half-groat (2 pence, fine silver 1.798&nbsp;g) was worth close to 1 sol parisis (1.912&nbsp;g).<ref>{{cite book |title=The History of Currency, 1252–1894: Being an Account of the Gold and Silver Moneys and Monetary Standards of Europe and America, Together with an Examination of the Effects of Currency and Exchange Phenomena on Commercial and National Progress and Well-being |quote=In 1427 a Mark (244.752 g) of silver was worth 8 livre tournois or 6.4 livre parisis |url=https://books.google.com/books?id=GrJCAAAAIAAJ&pg=PA33 |page=33 |date=1896 |last1=Shaw |first1=William Arthur |access-date=12 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512054417/https://books.google.com/books?id=GrJCAAAAIAAJ&pg=PA33 |url-status=live }} Hence one livre weighed 38.24&nbsp;g and one sol at 1.912&nbsp;g. Compare with 40''d'' sterling at 36&nbsp;g, 2''d'' at 1.8&nbsp;g.</ref> Also, after the Flemish monetary reform of 1434, the new [[Dutch guilder|Dutch florin]] was valued close to 40 pence while the Dutch [[stuiver]] (shilling) of 1.63&nbsp;g fine silver was valued close to 2 pence sterling at 1.8&nbsp;g.<ref name="Vierlander stuiver">{{cite web |title=The Vierlander, a precursor of the Euro. A first step towards monetary unification |url=http://www.nbbmuseum.be/en/2008/01/the-vierlander.htm |publisher=Museum of the National Bank of Belgium |quote=Stuiver weighs 3,4 g and has a fineness of 479/1000 silver... |access-date=12 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512195833/http://www.nbbmuseum.be/en/2008/01/the-vierlander.htm |url-status=live }} which gives the fine silver content of a Stuiver as 3.4 × 0.479 or almost 1.63&nbsp;g.</ref> This approximate pairing of English half-nobles and half-groats to Continental ''livres'' and ''sols'' persisted up to the 1560s.

===Great slump, 1464===
The [[Great Bullion Famine]] and the [[Great Slump (15th century)|Great Slump of the mid-15th century]] resulted in another reduction in the English penny to 12 grains sterling silver (0.719 g fine silver) and the introduction of a new [[Angel (coin)|half-angel gold coin]] of 40 grains (2.578 g), worth {{frac|1|6}}th pound or 40 pence.<ref name="History1300" /> The gold-silver ratio rose again to {{nowrap|1=40 × {{frac|0.719|2.578}} = 11.2}}. The reduction in the English penny approximately matched those with the French ''sol Parisis'' and the Flemish ''stuiver''; furthermore, from 1469 to 1475 an agreement between England and the [[Burgundian Netherlands]] made the English groat (4-pence) mutually exchangeable with the Burgundian ''double patard'' (or 2-''stuiver'') minted under [[Charles the Rash]].<ref name="foreign coins">{{cite web |url=https://www.britnumsoc.org/publications/Digital%20BNJ/pdfs/1963_BNJ_33_18.pdf |title=Burgundian Double Patards In Late Medieval England |first=Peter |last=Spufford |page=113 |access-date=7 November 2021 |archive-date=7 November 2021 |archive-url=https://web.archive.org/web/20211107004915/https://www.britnumsoc.org/publications/Digital%20BNJ/pdfs/1963_BNJ_33_18.pdf |url-status=live }}</ref><ref>{{cite web |title=A medieval silver coin; a double petard of Charles the Bold, Duke of Burgundy, Count of Flanders (1467–1477). |url=https://finds.org.uk/database/artefacts/record/id/191518 |publisher=Portable Antiquities Scheme |access-date=11 January 2022 |archive-date=11 January 2022 |archive-url=https://web.archive.org/web/20220111003212/https://finds.org.uk/database/artefacts/record/id/191518 |url-status=live }}</ref>

40 pence or {{frac|1|6}}th pound sterling made one [[Troy weight|Troy Ounce]] (480 grains, 31.1035 g) of sterling silver. It was approximately on a par with France's [[French franc#History|livre parisis]] of one French ounce (30.594 g), and in 1524 it would also be the model for a standardised German currency in the form of the [[Guldengroschen]], which also weighed 1 German ounce of silver or {{convert|29.232|g|ozt|abbr=on}}.<ref name="History1300" />{{rp|361}}

===Tudor, 1551===
[[File:Edward VI AR Crown 802157.jpg|thumb|left|Crown (5/–) of Edward VI, 1551]]
The last significant depreciation in sterling's [[silver standard]] occurred amidst the 16th century influx of precious metals from the Americas arriving through the [[Habsburg Netherlands]]. Enforcement of monetary standards amongst [[provinces of the Netherlands|its constituent provinces]] was loose, spending under King [[Henry VIII]] was extravagant, and England loosened the importation of cheaper continental coins for exchange into full-valued English coins.<ref name="foreign coins" /><ref>One problem cited was the importation of the ''galley halfpence'' or Venetian ''soldino'' whose silver content was 0.3 gram or only 0.4 penny. https://www.pressreader.com/uk/coin-collector/20210813/page/33 {{Webarchive|url=https://web.archive.org/web/20220110124042/https://www.pressreader.com/uk/coin-collector/20210813/page/33 |date=10 January 2022 }}</ref> All these contributed to [[the Great Debasement]] which resulted in a significant {{frac|1|3}}rd reduction in the bullion content of each pound sterling in 1551.<ref>{{cite web |title=The big problem of large bills: The Bank of Amsterdam and the origins of central banking (Working Paper, No. 2005-16, Federal Reserve Bank of Atlanta, Atlanta, GA) |date=2005 |page=8 |last=Quinn |first=Stephen |publisher=Leibniz Information Centre for Economics |url=https://www.econstor.eu/bitstream/10419/101021/1/wp0516.pdf |access-date=12 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512054418/https://www.econstor.eu/bitstream/10419/101021/1/wp0516.pdf |url-status=live }}</ref><ref name="History1500" />

The troy ounce of sterling silver was henceforth raised in price by 50% from 40 to 60 silver pennies (each penny weighing 8 grains sterling silver and containing {{convert|0.4795|g|ozt|abbr=on}} fine silver).<ref name="History1500" /> The gold half-angel of 40 grains ({{convert|2.578|g|ozt|abbr=on}} fine gold) was raised in price from 40 pence to 60 pence (5 shillings or {{frac|1|4}} pound) and was henceforth known as the [[Crown (British coin)|Crown]].

Prior to 1551, English coin denominations closely matched with corresponding sol (2''d'') and livre (40''d'') denominations in the Continent, namely:
* Silver; see [[Farthing (English coin)|farthing]] ({{frac|1|4}}''d''), [[Halfpenny (British pre-decimal coin)|halfpenny]] ({{frac|1|2}}''d''), [[Penny (English coin)|penny]] (1''d''), [[Twopence (British pre-decimal coin)|half-groat]] (2''d''), and [[Groat (coin)|groat]] (4''d'')
* Gold; see [[#Edward III, 1351|''1351'']]: {{frac|1|4}} noble (20''d''), {{frac|1|2}} noble (40''d'') and noble or [[Angel (coin)|angel]] (80''d'').

After 1551 new denominations were introduced,<ref name="new denoms">{{cite web|title=Coins of the Kings and Queens of England and Great Britain|quote=3d, 6d, 2/6, 5/- issued since 1551. |website=TreasureRealms.com|url=https://www.treasurerealm.com/coinpapers/england/coinmatrix.html|access-date=13 May 2021|archive-date=21 April 2021|archive-url=https://web.archive.org/web/20210421123241/http://www.treasurerealm.com/coinpapers/england/coinmatrix.html|url-status=live}}</ref> weighing similarly to 1464-issued coins but increased in value {{frac|1|1|2}} times, namely:
* In silver: the [[Threepence (British coin)|threepence (3''d'')]], replacing the half-groat; the [[Sixpence (British coin)|sixpence (6''d'')]], replacing the groat; and a new [[Shilling (English coin)|shilling]] or testoon (1s or 1/–).
* In silver or gold: the [[Crown (English coin)|crown]] (5/- (5s) or 60''d''), replacing the {{frac|1|2}} angel of 40''d''; and the [[Half crown (British coin)|half crown]] (2/6''d'' or 30''d''), replacing the {{frac|1|4}} angel of 20''d''
* And in gold: the new [[half sovereign]] (10/–) and [[Sovereign (British coin)|sovereign]] (£1 or 20/–)

===1601 to 1816===
{{more citations needed|section|date=August 2022}}
[[File:1686-Guinea-elephant-and-castle-James-II.jpg|thumb|right|upright 0.75|A golden [[Guinea (coin)#James II|guinea coin]] minted during the reign of [[James II of England|King James II]] in 1686. The "Elephant and Castle" motif below his head is the symbol of the [[Royal African Company]], Britain's foremost slave trading company.<ref name="Pettigrew 11">{{Cite book |last=Pettigrew |first=William Andrew |url=https://books.google.com/books?id=8osqAgAAQBAJ&pg=PA11 |title=Freedom's Debt: The Royal African Company and the Politics of the Atlantic Slave Trade, 1672–1752 |date=2013 |publisher=UNC Press Books |isbn=9781469611815 |page=11 |oclc=879306121 |access-date=20 June 2022 |archive-date=6 June 2022 |archive-url=https://web.archive.org/web/20220606042433/https://books.google.com/books?id=8osqAgAAQBAJ&pg=PA11 |url-status=live }}</ref> The RAC transported the gold used in the coin from West Africa to England after purchasing it from African merchants in the [[Guinea (region)|Guinea region]], who in turn sourced it from the [[Ashanti Empire]].<ref>{{cite book |last=Edgerton |first=Robert B. |year=2010 |title=The Fall of the Asante Empire: The Hundred-Year War For Africa's Gold Coast |publisher=Simon and Schuster |isbn=9781451603736 }}</ref>]]

The silver basis of sterling remained essentially unchanged until the 1816 introduction of the Gold Standard, save for the increase in the number of pennies in a troy ounce from 60 to 62 (hence, 0.464 g fine silver in a penny). Its gold basis remained unsettled, however, until the gold guinea was fixed at 21 shillings in 1717.

The [[Guinea (coin)|guinea]] was introduced in 1663 with {{frac|44|1|2}} guineas minted out of 12 troy ounces of 22-karat gold (hence, 7.6885 g fine gold) and initially worth £1 or 20 shillings. While its price in shillings was not legally fixed at first, its persistent trade value above 21 shillings reflected the poor state of clipped underweight silver coins tolerated for payment. Milled shillings of full weight were hoarded and exported to [[Continental Europe|the Continent]], while clipped, hand-hammered shillings stayed in circulation (as [[Gresham's law]] describes).<ref>{{Cite journal |last=Stride |first=H. G. |date=1955 |title=The Gold Coinage of Charles II |url=https://www.britnumsoc.org/publications/Digital%20BNJ/pdfs/1955_BNJ_28_28.pdf |journal=British Numismatic Journal |publisher=British Numismatic Society |page=393 |access-date=11 May 2021 |archive-date=11 May 2021 |archive-url=https://web.archive.org/web/20210511162104/https://www.britnumsoc.org/publications/Digital%20BNJ/pdfs/1955_BNJ_28_28.pdf |url-status=live }}</ref>

In the 17th century, English merchants tended to pay for imports in silver but were generally paid for exports in gold.{{citation needed|date=May 2021}} This effect was notably driven by trade with the Far East, as the Chinese insisted on payments for their exports being settled in silver. From the mid-17th century, around {{convert|28,000|MT|LT|-2}} of silver were received by China, principally from European powers, in exchange for Chinese tea and other goods. In order to be able to purchase Chinese exports in this period, England initially had to export to other European nations and request payment in silver,{{citation needed|date=August 2022}} until the [[British East India Company]] was able to foster the [[History of opium in China|indirect sale of opium]] to the Chinese.<ref>{{cite journal |first1=Dennis O. |last1=Flynn |first2=Arturo |last2=Giráldez |title=Cycles of silver: global economic unity through the mid-eighteenth century |journal=Journal of World History |year=2002 |volume=13 |number=2 |pages=391–427 |doi=10.1353/jwh.2002.0035 |jstor=20078977|s2cid=145805906 }}</ref>

Domestic demand for silver bullion in Britain further reduced silver coinage in circulation, as the improving fortunes of the merchant class led to increased demand for tableware. Silversmiths had always regarded coinage as a source of raw material, already verified for fineness by the government. As a result, sterling silver coins were being melted and fashioned into "sterling silverware" at an accelerating rate. An Act of the [[Parliament of England]] in 1697 tried to stem this tide by raising the minimum acceptable fineness on wrought plate from sterling's 92.5% to a new [[Britannia silver]] standard of 95.83%. Silverware made purely from melted coins would be found wanting when the silversmith took his wares to the [[assay office]], thus discouraging the melting of coins.{{citation needed|date=May 2021}}

During the time of [[Isaac Newton|Sir Isaac Newton]], Master of the [[Royal Mint|Mint]], the gold guinea was fixed at 21 shillings (£1/1/-) in 1717. But without addressing the problem of underweight silver coins, and with the high resulting gold-silver ratio of 15.2, it gave sterling a firmer footing in gold guineas rather than silver shillings, resulting in a de facto [[gold standard]]. Silver and copper tokens issued by private entities partly relieved the problem of small change until the [[Great Recoinage of 1816]].<ref>{{Cite journal |first=JAMES O'DONALD |last=MAYS |date=1978 |title=SILVER TOKENS AND BRISTOL |url=https://www.britnumsoc.org/publications/Digital%20BNJ/pdfs/1978_BNJ_48_11.pdf |journal=British Numismatic Journal |publisher=British Numismatic Society |page=98 |access-date=12 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512172836/https://www.britnumsoc.org/publications/Digital%20BNJ/pdfs/1978_BNJ_48_11.pdf |url-status=live }}</ref>

===Establishment of modern currency===
The [[Bank of England]] was founded in 1694,{{cn|date=July 2024}} followed by the [[Bank of Scotland]] a year later.<ref name=rampant>{{Cite web |url=http://www.rampantscotland.com/SCM/story.htm |title=Rampant Scotland |access-date=26 October 2005 }}</ref> The Bank of England began to issue [[banknote]]s from "the late 1600s".<ref>{{cite web |title=Early banknotes | publisher=Bank of England |url=https://www.bankofengland.co.uk/museum/online-collections/banknotes/early-banknotes}}</ref>

===Currency of Great Britain (1707) and the United Kingdom (1801)===
In the 17th century [[pound Scots|Scots currency]] was [[currency peg|pegged]] to sterling at a value of £12&nbsp;Scots = £1&nbsp;sterling.<ref>{{cite journal|last=Meikle|first=Maureen|title=Review of "Prices, Food and Wages in Scotland, 1550–1780|journal=Albion: A Quarterly Journal Concerned with British Studies|publisher=North American Conference on British Studies |url=https://www.jstor.org/stable/4052591 |url-access=subscription |volume=27|issue=4|page=724|jstor=4052591}}</ref>

In 1707, the kingdoms of [[Kingdom of England|England]] and [[Kingdom of Scotland|Scotland]] merged into the [[Kingdom of Great Britain]]. In accordance with the [[Treaty of Union]], the currency of Great Britain was sterling, with the [[pound Scots]] soon being replaced by sterling at the pegged value.

In 1801, Great Britain and the [[Kingdom of Ireland]] were united to form the [[United Kingdom of Great Britain and Ireland]]. However, the [[Irish pound#First pound|Irish pound]] was not replaced by sterling until January 1826.<ref>{{Cite book |last=Pulling |first=Alexander |title=Coin |publisher=[[HMSO]] |date=1904 |edition=2nd |series=The statutory rules and orders revised, being the statutory rules and orders (other than those of a local, personal, or temporary character) in force on 31 December 1903 |volume=2 |location=London |pages=8–9 |chapter=Proclamation, dated December 20 1825, assimilating the Gold and Silver Coinages in Great Britain and Ireland. |chapter-url=https://babel.hathitrust.org/cgi/pt?id=hvd.hl562h;view=1up;seq=166 |access-date=11 May 2021 |archive-date=12 May 2021 |archive-url=https://web.archive.org/web/20210512150311/https://babel.hathitrust.org/cgi/pt?id=hvd.hl562h;view=1up;seq=166 |url-status=live }}</ref> The conversion rate had long been £13&nbsp;Irish to £12&nbsp;sterling.{{citation needed|date=May 2021}} In 1928, six years after the [[Anglo-Irish Treaty]] restored Irish autonomy within the British Empire, the [[Irish Free State]] established a [[Irish pound#Second pound|new Irish pound]], initially pegged at par to sterling.<ref>The relevant enabling acts were the [http://www.irishstatutebook.ie/1926/en/act/pub/0014/print.html Coinage Act, 1926] {{Webarchive|url=https://web.archive.org/web/20141108084149/http://www.irishstatutebook.ie/1926/en/act/pub/0014/print.html |date=8 November 2014 }} and the [http://www.irishstatutebook.ie/1927/en/act/pub/0032/print.html Currency Act, 1927] {{Webarchive|url=https://web.archive.org/web/20141108083120/http://www.irishstatutebook.ie/1927/en/act/pub/0032/print.html |date=8 November 2014 }}</ref>

===Use in the Empire===
{{Main|Sterling area}}
Sterling circulated in much of the [[British Empire]]. In some areas it was used alongside local currencies. For example, the gold sovereign was legal tender in Canada despite the use of the [[Canadian dollar]]. Several colonies and dominions adopted the pound as their own currency. These included [[Australian pound|Australia]], [[Barbados]],<ref>{{cite web |title=The Central Bank of Barbados: Students' Centre – Money: Bits and Pieces |url=http://centralbank.org.bb/WEBCBB.nsf/webpage/580B8A7909CC2876042573650078A7A3?OpenDocument |url-status=dead |archive-url=https://web.archive.org/web/20080614133036/http://www.centralbank.org.bb/WEBCBB.nsf/webpage/580B8A7909CC2876042573650078A7A3?OpenDocument |archive-date=14 June 2008 |access-date=17 April 2010 |publisher=Centralbank.org.bb}}</ref> [[British West African pound|British West Africa]], [[Cypriot pound|Cyprus]], [[Fiji]], [[British India]], the [[Irish pound|Irish Free State]], [[Jamaican pound|Jamaica]], [[New Zealand pound|New Zealand]], [[South African pound|South Africa]] and [[Southern Rhodesia]]. Some of these retained parity with sterling throughout their existence (e.g. the South African pound), while others deviated from parity after the end of the gold standard (e.g. the Australian pound). These currencies and others tied to sterling constituted the core of the [[sterling area]].

The original English colonies on [[British North America|mainland North America]] were not party to the sterling area because the above-mentioned silver shortage in England coincided with these colonies' formative years. As a result of equitable trade (and rather less equitable piracy), the [[Spanish dollar|Spanish milled dollar]] became the most common coin within the English colonies.

===Gold standard===
[[File:Sovereign Victoria 1842 662015.jpg|thumb|right|"Shield reverse" sovereign of Queen Victoria, 1842]]
During the [[American War of Independence]] and the [[Napoleonic wars]], [[Bank of England]] notes were [[legal tender]], and their value floated relative to gold. The Bank also issued silver tokens to alleviate the shortage of silver coins. In 1816, the [[gold standard]] was adopted officially,{{citation needed|date=May 2021}} with silver coins minted at a rate of 66 shillings to a troy pound (weight) of sterling silver, thus rendering them as "token" issues (i.e. not containing their value in precious metal). In 1817, the [[sovereign (British coin)|sovereign]] was introduced, valued at 20/–. Struck in 22‑carat gold, it contained 113 grains or {{convert|7.32238|g|ozt|abbr=on}} of fine gold and replaced the [[Guinea (coin)|guinea]] as the standard British gold coin without changing the gold standard.

By the 19th century, sterling notes were widely accepted outside Britain. The American journalist [[Nellie Bly]] carried Bank of England notes on [[Around the World in Seventy-Two Days|her 1889–1890 trip around the world in 72 days]].<ref name="bly1890">{{Cite book |last=Bly, Nellie |title=Around the World in Seventy-Two Days |publisher=The Pictorial Weeklies Company |date=1890 |chapter=1 |author-link=Nellie Bly |chapter-url=http://digital.library.upenn.edu/women/bly/world/world.html |access-date=16 February 2016 |archive-date=21 January 2021 |archive-url=https://web.archive.org/web/20210121060407/http://digital.library.upenn.edu/women/bly/world/world.html |url-status=live }}</ref> During the late 19th and early 20th centuries, many other countries adopted the gold standard. As a consequence, conversion rates between different currencies could be determined simply from the respective gold standards. £1&nbsp;sterling was equal to US$4.87 in the [[United States]], [[Canadian dollar|Can$]]4.87 in [[Canada]], [[Dutch guilder|ƒ]]12.11 in [[Dutch Empire|Dutch territories]], [[French franc|F]]&nbsp;25.22 in [[French Colonial Empire|French territories]] (or equivalent currencies of the [[Latin Monetary Union]]), 20[[German gold mark|ℳ]]&nbsp;43[[Pfennig|₰]] in [[German Empire|Germany]], [[Ruble|Rbls]]&nbsp;9.46 in [[Russian Empire|Russia]] or [[Austro-Hungarian crown|K]]&nbsp;24.02 in [[Austria-Hungary]].{{citation needed|date=September 2022}} After the [[Paris Monetary Conference (1867)|International Monetary Conference of 1867]] in Paris, the possibility of the UK joining the [[Latin Monetary Union]] was discussed, and a [[Royal Commission]] on International Coinage examined the issues,<ref>{{cite web |date=26 July 2011 |title=Investment - World Gold Council |url=http://www.gold.org/value/reserve_asset/history/monetary_history/vol2/1868feb18.html |access-date=22 December 2011 |publisher=Gold.org |archive-date=4 November 2007 |archive-url=https://web.archive.org/web/20071104000912/http://www.gold.org/value/reserve_asset/history/monetary_history/vol2/1868feb18.html |url-status=live }}</ref> resulting in a decision against joining it.

===First world war: suspension of the gold standard===
The gold standard was suspended at the outbreak of [[First World War]] in 1914, with Bank of England and Treasury notes becoming legal tender. Before that war, the United Kingdom had one of the world's strongest [[Economy of the United Kingdom|economies]], holding 40% of the world's overseas investments. But after the end of the war, the country was highly indebted: Britain owed £850&nbsp;million (about £{{Formatprice|{{Inflation|UK|850000000|1918|r=-4}} }} today){{Inflation-fn|UK|df=y}} with interest costing the country some 40% of all government spending.<ref>{{Cite journal |date=2 September 1922 |title=The Interest Burden of Inter-Government Debts |url=https://books.google.com/books?id=C0REAQAAMAAJ&q=1921+loans+40+per+cent+British+government+spending%22&pg=PA342 |journal=The Economic World |volume=110 |page=342 |access-date=2 November 2020 |archive-date=15 April 2021 |archive-url=https://web.archive.org/web/20210415220705/https://books.google.com/books?id=C0REAQAAMAAJ&q=1921+loans+40+per+cent+British+government+spending%22&pg=PA342 |url-status=live }}</ref> The British government under Prime Minister [[David Lloyd George]] and Chancellor of the Exchequer [[Austen Chamberlain]] tried to make up for the deficit with a deflationary policy, but this only led to the [[Depression of 1920–1921|Depression of 1920–21]].<ref>{{Cite book|last=Steiner|first=Zara|url=https://www.worldcat.org/oclc/86068902|title=The lights that failed : European international history, 1919–1933|date=2005|publisher=Oxford University Press|isbn=978-0-19-151881-2|location=Oxford|oclc=86068902|access-date=9 October 2021|archive-date=6 October 2021|archive-url=https://web.archive.org/web/20211006194701/https://www.worldcat.org/title/lights-that-failed-european-international-history-1919-1933/oclc/86068902|url-status=live}}</ref>

By 1917, production of gold sovereigns had almost halted (the remaining production was for collector's sets and other very specific occasions), and by 1920, the silver coinage was debased from its original [[fineness|.925 fine]] to just .500 fine.{{citation needed|date=July 2021}} That was due to a drastic increase in silver prices from an average 27/6''d''. [£1.375] per [[troy pound]] in the period between 1894 and 1913, to 89/6''d''. [£4.475] in August 1920.<ref>{{Cite book |url=https://archive.org/details/poundsterlinghis0000feav/page/352/mode/2up|title = The pound sterling : A history of English money. |last1=Feavearyear |first1=Albert Edgar|date = 1963}}</ref>

===Interwar period: gold standard reinstated===
To try to resume stability, a version of the gold standard was reintroduced in 1925, under which the currency was fixed to gold at its pre-war peg, but one could only exchange currency for gold bullion, not for coins. On 21 September 1931, this was abandoned during the [[Great Depression in the United Kingdom|Great Depression]], and sterling suffered an initial devaluation of some 25%.<ref>''The Board of Trade Journal'', 7 January 1932</ref>

Since the suspension of the gold standard in 1931, sterling has been a [[fiat money|fiat currency]], with its value determined by its continued acceptance in the national and international economy.

===World War II===
In 1940, an agreement with the US pegged sterling to the [[United States dollar|US dollar]] at a rate of £1 = US$4.03. (Only the year before, it had been US$4.86.)<ref>[http://www.bankofcanada.ca/wp-content/uploads/2010/07/1930-39.pdf ''A History of the Canadian Dollar''] {{Webarchive|url=https://web.archive.org/web/20120127200852/http://www.bankofcanada.ca/wp-content/uploads/2010/07/1930-39.pdf |date=27 January 2012 }}, p. 51.</ref> This rate was maintained through the [[World War II|Second World War]] and became part of the [[Bretton Woods system]] which governed post-war exchange rates.

==History (1946–present)==
===Bretton Woods<span class="anchor" id="1949 sterling crisis"></span>===
{{See also|Economic history of the United Kingdom#1945–1951: Age of Austerity|Anglo-American loan#Terms}}
Under continuing economic pressure, and despite months of denials that it would do so, on 19 September 1949 the government devalued the pound by 30.5% to US$2.80.<ref name="srplumt">{{Cite news |last=Nevin |first=Louis |date=3 October 1976 |title=How the British pound plummeted |page=E2 |work=Spokesman-Review |agency=Associated Press |location=(Spokane, Washington) |url=https://news.google.com/newspapers?id=EPQjAAAAIBAJ&pg=6843%2C1538862 |access-date=2 November 2020 |archive-date=15 April 2021 |archive-url=https://web.archive.org/web/20210415220709/https://news.google.com/newspapers?id=EPQjAAAAIBAJ&pg=6843%2C1538862 |url-status=live }}</ref> The [[1949 sterling devaluation]] prompted several other currencies to be devalued against the dollar.

In 1961, 1964, and 1966, sterling came under renewed pressure, as speculators were selling pounds for dollars. In summer 1966, with the value of the pound falling in the [[Foreign exchange market|currency markets]], [[Exchange Controls in the United Kingdom|exchange controls]] were tightened by the [[Harold Wilson|Wilson]] government. Among the measures, tourists were banned from taking more than £50 out of the country in travellers' cheques and remittances, plus £15 in cash;{{efn|£50 in 1966 is about £{{inflation|UK|50|1966}} today.}} this restriction was not lifted until 1979. Sterling was [[1967 sterling devaluation|devalued by 14.3%]] to £1 = US$2.40 on 18 November 1967.<ref name=srplumt/><ref name="srdev67">{{Cite news |date=19 November 1967 |title=British devalue pound, ask $1 million loan |page=1, sec. 1 |work=Spokesman-Review |agency=Associated Press |location=(Spokane, Washington) |url=https://news.google.com/newspapers?id=jDlWAAAAIBAJ&pg=7568%2C1478023 |access-date=2 November 2020 |archive-date=15 April 2021 |archive-url=https://web.archive.org/web/20210415223542/https://news.google.com/newspapers?id=jDlWAAAAIBAJ&pg=7568%2C1478023 |url-status=live }}</ref>

===Decimalisation===
{{Main|Decimal Day}}

Until decimalisation, amounts in sterling were expressed in [[£sd|pounds, shillings, and pence]], with various widely understood notations. The same amount could be stated as 32''s''.&nbsp;6''d''., 32/6, £1.&nbsp;12''s''.&nbsp;6''d''., or £1/12/6. It was customary to specify some prices (for example professional fees and auction prices for works of art) in guineas (abbr: gn. or gns.), although [[Guinea (British coin)|guinea coins]] were no longer in use.

Formal parliamentary proposals to decimalise sterling were first made in 1824 when [[John Wrottesley, 1st Baron Wrottesley|Sir John Wrottesley]], MP for [[Staffordshire (UK Parliament constituency)|Staffordshire]], asked in the [[House of Commons of the United Kingdom|House of Commons]] whether consideration had been given to decimalising the currency.<ref>Hansard Parliamentary Papers, HC Deb, 25 February 1824, vol 10, cc445–49</ref> Wrottesley raised the issue in the House of Commons again in 1833,<ref>Hansard Parliamentary Papers, HC Deb, 10 August 1833, vol 20, cc482–502</ref> and it was again raised by [[John Bowring]], MP for [[Kilmarnock Burghs (UK Parliament constituency)|Kilmarnock Burghs]], in 1847<ref>Hansard Parliamentary Papers, HC Deb, 27 April 1847, vol 92, cc13–23</ref> whose efforts led to the introduction in 1848 of what was in effect the first decimal coin in the United Kingdom, the florin, valued at one-tenth of a pound. However, full decimalisation was resisted, although the florin coin, re-designated as ''ten new pence'', survived the transfer to a full decimal system in 1971, with examples surviving in British coinage until 1993.

[[John Benjamin Smith]], MP for [[Stirling Burghs (UK Parliament constituency)|Stirling Burghs]], raised the issue of full decimalisation again in [[Parliament of the United Kingdom|Parliament]] in 1853,<ref>Hansard Parliamentary Papers, HC Deb, 5 April 1853, vol 125, cc595–96</ref> resulting in the Chancellor of the Exchequer, [[William Ewart Gladstone|William Gladstone]], announcing soon afterwards that "the great question of a decimal coinage" was "now under serious consideration".<ref>Hansard Parliamentary Papers, HC Deb, 9 June 1853, vol 127, cc1352–59</ref> A full proposal for the decimalisation of sterling was then tabled in the [[House of Commons of the United Kingdom|House of Commons]] in June 1855, by [[Sir William Brown, 1st Baronet, of Richmond Hill|William Brown]], MP for [[South Lancashire (UK Parliament constituency)|Lancashire Southern]], with the suggestion that the pound sterling be divided into one thousand parts, each called a "mil", or alternatively a farthing, as the pound was then equivalent to 960 farthings which could easily be rounded up to one thousand farthings in the new system.<ref>Hansard Parliamentary Papers, HC Deb, 12 June 1855, vol 138, cc1867–909</ref> This did not result in the conversion of sterling into a decimal system, but it was agreed to establish a [[Royal Commission]] to look into the issue.<ref>Hansard Parliamentary Papers, HC Deb, 23 July 1857, vol 147, cc304–29</ref> However, largely due to the hostility to decimalisation of two of the appointed commissioners, [[Samuel Jones-Loyd, 1st Baron Overstone|Lord Overstone]] (a banker) and [[John Hubbard, 1st Baron Addington|John Hubbard]] ([[Governor of the Bank of England]]), decimalisation in Britain was effectively quashed for over a hundred years.<ref>Luca Einaudi, ''European Monetary Unification and the International Gold Standard (1865–1873)'' (Oxford: Oxford University Press, 2001) p. 144</ref>

However, sterling was decimalised in various British colonial territories before the United Kingdom (and in several cases in line with William Brown's proposal that the pound be divided into 1,000 parts, called mils). These included [[British Hong Kong|Hong Kong]] from 1863 to 1866;<ref>Ma Tak Wo 2004, Illustrated Catalogue of Hong Kong Currency, Ma Tak Wo Numismatic Co., Ltd. Kowloon, Hong Kong.{{ISBN|962-85939-3-5}}</ref> [[British Cyprus|Cyprus]] from 1955 until 1960 (and continued on the island as the division of the [[Cypriot pound]] until 1983); and the [[Mandate for Palestine|Palestine Mandate]] from 1926 until 1948.<ref>Howard M. Berlin, ''The Coins and Banknotes of Palestine Under the British Mandate, 1927–1947'' (Jefferson: McFarland, 2001) p. 26f</ref>

Later, in 1966, the UK Government decided to include in the [[Queen's Speech]] a plan to convert sterling into a decimal currency.<ref>Hansard Parliamentary Papers, HL, Deb 10 March 1966, vol 273, cc1211–16</ref> As a result of this, on 15 February 1971, the UK decimalised sterling, replacing the shilling and the penny with a single subdivision, the ''new penny'', which was worth 2.4''d''. For example, a price tag of £1/12/6. became {{frac|£1.62|1|2}}. The word "new" was omitted from coins minted after 1981.

===Free-floating pound===
[[File:GBP-USD exchange rate.webp|thumb|upright 1.25|right|The cost of 1 pound sterling in [[United States dollar]]s 1971–2022]]
With the breakdown of the [[Bretton Woods system]], sterling [[floating currency|floated]] from August 1971 onwards. At first, it [[Currency appreciation and depreciation|appreciated]] a little, rising to almost {{currency|2.65|USD|linked=no}} in March 1972 from {{currency|2.42|USD|linked=no}}, the upper bound of the band in which it had been fixed. The [[sterling area]] effectively ended at this time, when the majority of its members also chose to float freely against sterling and the dollar.

===1976 sterling crisis===
{{main|1976 sterling crisis}}
[[File:Uk inflation history.webp|thumb|upright 1.25|right|UK inflation history]]
[[File:Uk bonds.webp|thumb|upright 1.25|UK bonds 1960–2022: the yield on UK Government benchmark ten-year bonds increased to over 15% in the 1970s and early 1980s.]]
[[James Callaghan]] became [[Prime Minister of the United Kingdom|Prime Minister]] in 1976. He was immediately told the economy was facing huge problems, according to documents released in 2006 by the [[The National Archives (United Kingdom)|National Archives]].<ref>{{Cite news |last=Casciani |first=Dominic |date=29 December 2006 |title=Crisis threatened nuclear weapons |work=BBC News |url=http://news.bbc.co.uk/1/hi/uk_politics/6212557.stm |access-date=17 April 2010 |archive-date=3 September 2017 |archive-url=https://web.archive.org/web/20170903072238/http://news.bbc.co.uk/1/hi/uk_politics/6212557.stm |url-status=live }}</ref> The effects of the failed [[Barber Boom]] and the [[1973 oil crisis]] were still being felt,<ref>{{cite journal |first=G. R. |last= Steele |url=https://doi.org/10.1111/j.1468-0270.2010.02028.x |title=INFLATION ECONOMICS: THE HEATH–BARBER BOOM, 1972–74 |journal=Economic Affairs |year= 2010 |volume=30 |issue=3|pages= 79–81 |doi= 10.1111/j.1468-0270.2010.02028.x |s2cid= 152522190 |url-access=subscription }}</ref> with [[Stagflation of the 1970s|inflation]] rising to nearly 27% in 1975.<ref>{{cite web |title=The Cabinet Papers – Global oil shortage |url=http://www.nationalarchives.gov.uk/cabinetpapers/themes/global-oil-shortage.htm |access-date=22 December 2010 |publisher=[[The National Archives (United Kingdom)|The National Archives]] |archive-date=3 February 2011 |archive-url=https://web.archive.org/web/20110203020949/https://www.nationalarchives.gov.uk/cabinetpapers/themes/global-oil-shortage.htm |url-status=live }}</ref> Financial markets were beginning to believe the pound was overvalued, and in April that year ''[[The Wall Street Journal]]'' advised the sale of sterling investments in the face of high taxes, in a story that ended with "goodbye, Great Britain. It was nice knowing you".<ref>{{Cite news |last=Martin |first=Iain |author-link=Iain Martin |date=2 December 2009 |title=Brutal Realism and the Promise of Better Times |work=[[The Wall Street Journal]] |location=New York |url=https://online.wsj.com/news/articles/SB10001424052748704107104574570122315830890 |access-date=14 February 2014 |archive-date=22 February 2014 |archive-url=https://web.archive.org/web/20140222144637/http://online.wsj.com/news/articles/SB10001424052748704107104574570122315830890 |url-status=live }}</ref> At the time the [[Government of the United Kingdom|UK Government]] was running a budget deficit, and the Labour government's strategy emphasised high public spending.<ref name=srplumt/> Callaghan was told there were three possible outcomes: a disastrous free fall in sterling, an internationally unacceptable siege economy, or a deal with key allies to prop up the pound while painful economic reforms were put in place. The [[Federal government of the United States|US Government]] feared the crisis could endanger [[NATO]] and the [[European Economic Community]] (EEC), and in light of this, the [[United States Department of the Treasury|US Treasury]] set out to force domestic policy changes. In November 1976, the [[International Monetary Fund]] (IMF) announced the conditions for a loan, including deep cuts in [[public expenditure]].<ref>{{Cite book |last1=Burk |first1=Kathleen |url=http://yalebooks.co.uk/display.asp?K=9780300057287 |title=Goodbye, Great Britain: The 1976 IMF Crisis |last2=Cairncross |first2=Alec |date=19 February 1992 |publisher=Yale University Press |isbn=0-300-05728-8 |author-link=Kathleen Burk |author-link2=Alexander Cairncross (economist) |access-date=15 February 2014 |archive-date=17 October 2015 |archive-url=https://web.archive.org/web/20151017203542/http://yalebooks.co.uk/display.asp?K=9780300057287 |url-status=live }}</ref>

===1979–1989===
The [[Conservative Party (UK)|Conservative Party]] was elected to office in [[1979 United Kingdom general election|1979]], on a programme of fiscal austerity. Initially, sterling rocketed, moving above £1 to US$2.40, as interest rates rose in response to the [[monetarist]] policy of targeting [[money supply]]. The high exchange rate was widely blamed for the deep [[Early 1980s recession|recession of 1981]]. Sterling fell sharply after 1980; at its lowest, £1 stood at just US$1.03 in March 1985, before rising to US$1.70 in December 1989.<ref name="Samson">{{Cite news |last=Samson |first=Rob |date=5 January 2015 |title=GBP Forecast to See Support at 1.40 v US Dollar, But 1983 Lows a Step Too Far |publisher=Pound Sterling Live |url=http://www.poundsterlinglive.com/usd/1820-pound-to-dollar-forecast-support-level |access-date=30 January 2015 |archive-date=6 February 2015 |archive-url=https://web.archive.org/web/20150206154751/http://www.poundsterlinglive.com/usd/1820-pound-to-dollar-forecast-support-level |url-status=live }}</ref>

===Following the Deutsche Mark===
In 1988, the [[Chancellor of the Exchequer]], [[Nigel Lawson]], decided that sterling should "shadow" the [[Deutsche Mark]] (DM), with the unintended result of a rapid rise in inflation as the economy boomed due to low interest rates.<ref>{{Cite news |last=Keegan |first=William |date=26 October 2003 |title=Sometimes it can pay to break the rules |work=[[The Observer]] |location=London |url=https://www.theguardian.com/business/2003/oct/26/politics.economicpolicy |access-date=14 February 2014 |archive-date=27 February 2013 |archive-url=https://web.archive.org/web/20130227165649/http://www.guardian.co.uk/business/2003/oct/26/politics.economicpolicy |url-status=live }}</ref>

Following [[German reunification]] in 1990, the reverse held true, as high German borrowing costs to fund Eastern reconstruction, exacerbated by the political decision to convert the [[East German mark|Ostmark]] to the D–Mark on a 1:1 basis, meant that interest rates in other countries shadowing the D–Mark, especially the UK, were far too high relative to domestic circumstances, leading to a housing decline and recession.

===Following the European Currency Unit===
On 8 October 1990 the Conservative government ([[Third Thatcher ministry]]) decided to join the [[European Exchange Rate Mechanism]] (ERM), with £1 set at [[Deutsche Mark|DM]]&nbsp;2.95. However, the country was forced to withdraw from the system on "[[Black Wednesday]]" (16 September 1992) as Britain's economic performance made the exchange rate unsustainable. The event was also triggered by comments by Bundesbank president [[Helmut Schlesinger]] who suggested the pound would eventually have to be devalued.<ref>{{Cite book |last=Naef |first=Alain |url=https://www.cambridge.org/core/books/an-exchange-rate-history-of-the-united-kingdom/68B7E57D9884394B815C76D48ACD3FB6 |title=An Exchange Rate History of the United Kingdom: 1945–1992 |date=2022 |publisher=Cambridge University Press |isbn=978-1-108-83999-0 |series=Studies in Macroeconomic History |location=Cambridge |page=214}}</ref><ref>{{Cite book |last=James |first=Harold |url=https://www.cambridge.org/core/books/making-a-modern-central-bank/901C6C0969209C20D1962B698DA26874 |title=Making a Modern Central Bank: The Bank of England 1979–2003 |date=2020 |publisher=Cambridge University Press |isbn=978-1-108-83501-5 |series=Studies in Macroeconomic History |location=Cambridge |page=290}}</ref>

"Black Wednesday" saw interest rates jump from 10% to 15% in an unsuccessful attempt to stop the pound from falling below the ERM limits. The exchange rate fell to DM&nbsp;2.20. Those who had argued<ref>Wren-Lewis, Simon, et al. (June 1991). "Evaluating the U.K.'s Choice of Entry Rate into the ERM", ''The Manchester School of Economic & Social Studies Vol. LIV Supplement'', University of Manchester, pp. 1–22.</ref> for a lower GBP/DM exchange rate were vindicated since the cheaper pound encouraged exports and contributed to the economic prosperity of the 1990s.{{citation needed|date=June 2022}}

===Following inflation targets===
In 1997, the newly elected [[Labour Party (UK)|Labour]] government handed over day-to-day control of interest rates to the [[Bank of England]] (a policy that had originally been advocated by the [[Liberal Democrats (UK)|Liberal Democrats]]).<ref>{{cite hansard |house=[[House of Commons of the United Kingdom|House of Commons]] |url=https://publications.parliament.uk/pa/cm199798/cmhansrd/vo970702/debtext/70702-21.htm |date=2 July 1997 |column_start=303 |column_end=303 |title=Budget Statement }} {{Cite web |url=https://publications.parliament.uk/pa/cm199798/cmhansrd/vo970702/debtext/70702-21.htm |title=House of Commons Hansard Debates for 2 Jul 1997 (Pt 21) |access-date=8 September 2017 |archive-date=22 September 2017 |archive-url=https://web.archive.org/web/20170922045429/https://publications.parliament.uk/pa/cm199798/cmhansrd/vo970702/debtext/70702-21.htm |url-status=live}}</ref> The Bank is now responsible for setting its base rate of interest so as to keep inflation (as measured by the [[Consumer Price Index (United Kingdom)|Consumer Price Index]] (CPI)) very close to 2% per annum. Should CPI inflation be more than one percentage point above or below the target, the Governor of the Bank of England is required to write an open letter to the [[Chancellor of the Exchequer]] explaining the reasons for this and the measures which will be taken to bring this measure of inflation back in line with the 2% target. On 17 April 2007, annual CPI inflation was reported at 3.1% (inflation of the [[Retail Prices Index (United Kingdom)|Retail Prices Index]] was 4.8%). Accordingly, and for the first time, the Governor had to write publicly to the UK Government explaining why inflation was more than one percentage point higher than its target.<ref>{{Cite news |last=<!--Staff writer(s); no by-line.--> |date=17 April 2007 |title=Rate hike fear as inflation jumps |work=BBC News |url=http://news.bbc.co.uk/1/hi/business/6562723.stm |access-date=17 April 2010 |archive-date=15 December 2007 |archive-url=https://web.archive.org/web/20071215001257/http://news.bbc.co.uk/1/hi/business/6562723.stm |url-status=live }}</ref>

===Euro===
{{Main|United Kingdom and the euro}}
In 2007, [[Gordon Brown]], then [[Chancellor of the Exchequer]], ruled out membership in the eurozone for the foreseeable future, saying that the decision not to join had been right for Britain and for Europe.<ref>{{Cite news |last=Treneman |first=Ann |author-link=Ann Treneman |date=24 July 2007 |title=Puritanism comes too naturally for 'Huck' Brown |work=[[The Times]] |location=London |url=http://www.thetimes.co.uk/tto/news/politics/article2023652.ece |url-access=subscription |access-date=14 February 2014 |archive-date=3 March 2014 |archive-url=https://web.archive.org/web/20140303163858/http://www.thetimes.co.uk/tto/news/politics/article2023652.ece |url-status=live }}</ref>

On 1 January 2008, with the [[Republic of Cyprus]] switching its currency from the [[Cypriot pound]] to the euro, the British sovereign bases on Cyprus ([[Akrotiri and Dhekelia]]) followed suit, making the [[Akrotiri and Dhekelia|Sovereign Base Areas]] the only territory under British sovereignty to officially use the euro.<ref>{{Cite news |last=Theodoulou |first=Michael |author-link=Michael Theodoulou |date=27 December 2007 |title=Euro reaches field that is for ever England |work=The Times |location=London |url=http://www.thetimes.co.uk/tto/news/world/europe/article2596459.ece |url-access=subscription |access-date=14 February 2014 |archive-date=3 March 2014 |archive-url=https://web.archive.org/web/20140303163905/http://www.thetimes.co.uk/tto/news/world/europe/article2596459.ece |url-status=live }}</ref>

The government of former Prime Minister [[Tony Blair]] had pledged to hold a public referendum to decide on the adoption of the Euro should "[[five economic tests]]" be met, to increase the likelihood that any adoption of the euro would be in the national interest. In addition to these internal (national) criteria, the UK would have to meet the European Union's economic [[convergence criteria]] (Maastricht criteria) before being allowed to adopt the euro. The [[Cameron–Clegg coalition|Conservative and Liberal Democrat coalition government]] (2010–2015) ruled out joining the euro for that parliamentary term.

The idea of replacing sterling with the euro was always controversial with the British public, partly because of sterling's identity as a symbol of British sovereignty and because it would, according to some critics, have led to suboptimal interest rates, harming the British economy.<ref>{{Cite news |date=12 May 2003 |title=Should Britain join the euro? |work=[[The Daily Telegraph]] |location=London |url=https://www.telegraph.co.uk/expat/4187263/Should-Britain-join-the-euro.html |access-date=14 February 2014 |archive-date=24 March 2014 |archive-url=https://web.archive.org/web/20140324191107/http://www.telegraph.co.uk/expat/4187263/Should-Britain-join-the-euro.html |url-status=live }}</ref> In December 2008, the results of a [[BBC]] poll of 1,000 people suggested that 71% would vote no to the euro, 23% would vote yes, while 6% said they were unsure.<ref>{{Cite news |date=1 January 2009 |title=Most Britons 'still oppose euro' |work=BBC News |url=http://news.bbc.co.uk/1/hi/uk/7806936.stm |access-date=17 April 2010 |archive-date=3 September 2017 |archive-url=https://web.archive.org/web/20170903072201/http://news.bbc.co.uk/1/hi/uk/7806936.stm |url-status=live }}</ref> Sterling did not join the Second European Exchange Rate Mechanism (ERM II) after the euro was created. Denmark and the UK had opt-outs from entry to the euro. Theoretically, every EU nation but Denmark must eventually sign up.

As a member of the [[European Union]], the United Kingdom could have adopted the [[euro]] as its currency. However, the subject was always politically controversial, and the UK negotiated an opt-out on this issue. Following the [[Brexit|UK's withdrawal from the EU]], on 31 January 2020, the Bank of England ended its membership of the [[European System of Central Banks]],<ref>{{Cite press release |title=ECB welcomes ratification of agreement on orderly UK withdrawal from European Union |date=30 January 2020 |publisher=European Central Bank |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200130_1~0e0eb9bef4.en.html |access-date=29 June 2020 |archive-date=11 July 2020 |archive-url=https://web.archive.org/web/20200711171846/https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200130_1~0e0eb9bef4.en.html |url-status=live }}</ref> and shares in the [[European Central Bank]] were reallocated to other EU banks.<ref>{{Cite press release |title=ECB's subscribed capital to remain steady after Bank of England leaves the European System of Central Banks |date=30 January 2020 |publisher=European Central Bank |url=https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200130_2~59d6ffffe1.en.html |access-date=29 June 2020 |archive-date=4 June 2020 |archive-url=https://web.archive.org/web/20200604225347/https://www.ecb.europa.eu/press/pr/date/2020/html/ecb.pr200130_2~59d6ffffe1.en.html |url-status=live }}</ref>

===Recent exchange rates===
{{Main|Economy of the United Kingdom#Exchange rates}}
[[File:GBP-USD v2.svg|thumb|upright 1.25|The cost of £1&nbsp;sterling in [[US dollar]]s (from 1990)]]
[[File:Euro exchange rate to GBP.svg|thumb|upright 1.25|right|The cost of one [[Euro]] in sterling (from 1999)]]

Sterling and the euro fluctuate in value against one another, although there may be correlation between movements in their respective exchange rates with other currencies such as the US dollar. Inflation concerns in the UK led the Bank of England to raise interest rates in late 2006 and 2007. This caused sterling to appreciate against other major currencies and, with the US dollar depreciating at the same time, sterling hit a 15-year high against the US dollar on 18 April 2007, with £1 reaching US$2 the day before, for the first time since 1992. Sterling and many other currencies continued to appreciate against the dollar; sterling hit a 26-year high of £1 to US$2.1161 on 7 November 2007 as the dollar fell worldwide.<ref>{{Cite news |last=<!--Staff writer(s); no by-line.--> |date=18 April 2007 |title=Pound reaches 26-year dollar high |work=BBC News |url=http://news.bbc.co.uk/1/hi/business/6566715.stm |access-date=17 April 2010 |archive-date=26 February 2009 |archive-url=https://web.archive.org/web/20090226213652/http://news.bbc.co.uk/1/hi/business/6566715.stm |url-status=live }}</ref> From mid-2003 to mid-2007, the pound/euro rate remained within a narrow range (€1.45 ± 5%).<ref>[http://www.oanda.com/products/fxgraph/fxgraph.shtml FXGraph: Graphical Display of Currency Rates] {{Webarchive|url=https://web.archive.org/web/20060707192415/http://www.oanda.com/products/fxgraph/fxgraph.shtml |date=7 July 2006 }} OANDA.COM</ref>

Following the [[global financial crisis of 2008–2009|global financial crisis in late 2008]], sterling depreciated sharply, declining to £1 to US$1.38 on 23 January 2009<ref>{{cite web |title=GBPUSD=X: Basic Chart for GBP/USD – Yahoo! Finance |url=https://finance.yahoo.com/q/bc?s=GBPUSD=X&t=3m&l=on&z=m&q=l&c= |access-date=17 April 2010 |publisher=Finance.yahoo.com |archive-date=5 May 2010 |archive-url=https://web.archive.org/web/20100505033131/http://finance.yahoo.com/q/bc?s=GBPUSD=X&t=3m&l=on&z=m&q=l&c= |url-status=live }}</ref> and falling below £1 to €1.25 against the euro in April 2008.<ref>{{cite web |title=ECB ratings: Pound sterling in Euros |url=http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-gbp.en.html |access-date=17 April 2010 |publisher=European Central Bank |archive-date=1 August 2013 |archive-url=https://web.archive.org/web/20130801082219/http://www.ecb.int/stats/exchange/eurofxref/html/eurofxref-graph-gbp.en.html |url-status=live }}</ref> There was a further decline during the remainder of 2008, most dramatically on 29 December when its euro rate hit an all-time low at €1.0219, while its US dollar rate depreciated.<ref>{{Cite news |date=29 December 2008 |title=Pound hits new low against euro |work=BBC News |url=http://news.bbc.co.uk/1/hi/business/7802981.stm |access-date=17 April 2010 |archive-date=3 September 2017 |archive-url=https://web.archive.org/web/20170903072725/http://news.bbc.co.uk/1/hi/business/7802981.stm |url-status=live }}</ref><ref>{{cite web |date=16 April 2011 |title=Historical rates |url=http://www.oanda.com/currency/historical-rates |access-date=6 November 2011 |publisher=Oanda Corporation |archive-date=2 February 2011 |archive-url=https://web.archive.org/web/20110202154335/http://www.oanda.com/currency/historical-rates |url-status=live }}</ref> Sterling appreciated in early 2009, reaching a peak against the euro of £1 to €1.17 in mid-July. In the following months sterling remained broadly steady against the euro, with £1 valued on 27 May 2011 at €1.15 and US$1.65.

On 5 March 2009, the [[Bank of England]] announced that it would pump £75&nbsp;billion of new [[capital (economics)|capital]] into the [[Economy of the United Kingdom|British economy]], through a process known as [[quantitative easing]] (QE). This was the first time in the United Kingdom's history that this measure had been used, although the Bank's [[Governor of the Bank of England|Governor]] [[Mervyn King, Baron King of Lothbury|Mervyn King]] suggested it was not an experiment.<ref name="BBC">{{Cite news |last=<!--Staff writer(s); no by-line.--> |date=5 March 2009 |title=Bank to pump £75bn into economy |work=BBC News |url=http://news.bbc.co.uk/1/hi/business/7927100.stm |access-date=5 March 2009 |archive-date=6 March 2009 |archive-url=https://web.archive.org/web/20090306232113/http://news.bbc.co.uk/1/hi/business/7927100.stm |url-status=live }}</ref>

The process saw the Bank of England creating new money for itself, which it then used to purchase [[asset]]s such as [[government bond]]s, secured [[commercial paper]], or [[corporate bond]]s.<ref name="CNN1">{{Cite news |last=<!--Staff writer(s); no by-line.--> |date=6 March 2009 |title=ECB, Bank of England cut rates to record lows |work=CNN|url=http://edition.cnn.com/2009/BUSINESS/03/05/uk.interest.rate/index.html |access-date=6 March 2009 |archive-date=18 January 2018 |archive-url=https://web.archive.org/web/20180118162110/http://edition.cnn.com/2009/BUSINESS/03/05/uk.interest.rate/index.html |url-status=live }}</ref> The initial amount stated to be created through this method was £75&nbsp;billion, although [[Chancellor of the Exchequer]] [[Alistair Darling]] had given permission for up to £150&nbsp;billion to be created if necessary.<ref name="Times">{{Cite news |last=Duncan |first=Gary |date=6 March 2009 |title=Bank 'prints' £75bn and cuts interest rates in half |work=The Times |location=London |url=http://www.thetimes.co.uk/tto/business/economics/article2149937.ece |url-access=subscription |access-date=5 March 2009 |archive-date=3 March 2014 |archive-url=https://web.archive.org/web/20140303163902/http://www.thetimes.co.uk/tto/business/economics/article2149937.ece |url-status=live }}</ref> It was expected that the process would continue for three months, with results only likely in the long term.<ref name=BBC /> By 5 November 2009, some £175&nbsp;billion had been injected using QE, and the process remained less effective in the long term. In July 2012, the final increase in QE meant it had peaked at £375&nbsp;billion, then holding solely UK Government bonds, representing one third of the UK national debt.<ref name="BofEAPF">{{Cite news |last=Meaden |first=Sam |date=6 April 2013 |title=Bank of England, Asset Purchase Facility – Results |publisher=Bank of England |url=http://www.bankofengland.co.uk/markets/Pages/apf/results.aspx |access-date=6 April 2013 |archive-date=16 February 2013 |archive-url=https://web.archive.org/web/20130216051135/http://www.bankofengland.co.uk/markets/Pages/apf/results.aspx |url-status=live }}</ref>

The result of the [[2016 United Kingdom European Union membership referendum|2016 UK referendum on EU membership]] caused a major decline in sterling against other world currencies as the future of international trade relationships and domestic political leadership became unclear.<ref>{{cite web |last=Lawrence |first=Colin |title=Exchange Rates Today: British Pound Slumps Vs Euro, Dollar As UK Services Hits Record Low |url=http://www.exchangerates.org.uk/news/15728/gbp-eur-pound-to-euro-exchange-rate-news-and-fiveday-forecast.html |website=Exchange Rates UK – Live Coverage of the British Pound & Other G10 Currencies |access-date=7 July 2016 |archive-date=7 July 2016 |archive-url=https://web.archive.org/web/20160707071826/http://www.exchangerates.org.uk/news/15728/gbp-eur-pound-to-euro-exchange-rate-news-and-fiveday-forecast.html |url-status=live }}</ref> The referendum result weakened sterling against the euro by 5% overnight. The night before the vote, sterling was trading at £1 to €1.30; the next day, this had fallen to £1 to €1.23. By October 2016, the exchange rate was £1 to €1.12, a fall of 14% since the referendum. By the end of August 2017 sterling was even lower, at £1 to €1.08.<ref>{{cite web |title=British Pound (GBP) to Euro (EUR) exchange rate history |url=http://www.exchangerates.org.uk/GBP-EUR-exchange-rate-history.html |website=www.exchangerates.org.uk |access-date=24 October 2016 |archive-date=24 October 2016 |archive-url=https://web.archive.org/web/20161024215246/http://www.exchangerates.org.uk/GBP-EUR-exchange-rate-history.html |url-status=live }}</ref> Against the US dollar, meanwhile, sterling fell from £1 to $1.466 to £1 to $1.3694 when the referendum result was first revealed, and down to £1 to $1.2232 by October 2016, a fall of 16%.<ref>{{cite web |title=British Pound (GBP) to US Dollar (USD) exchange rate history |url=http://www.exchangerates.org.uk/GBP-USD-exchange-rate-history.html |website=www.exchangerates.org.uk |access-date=24 October 2016 |archive-date=24 October 2016 |archive-url=https://web.archive.org/web/20161024195104/http://www.exchangerates.org.uk/GBP-USD-exchange-rate-history.html |url-status=live }}</ref>

In September 2022, under the influence of inflation and tax cuts funded by borrowing,<ref>{{cite news |url=https://www.bbc.co.uk/news/business-49179234 | title=Exchange rates: Why has the value of the pound tumbled? |work=BBC News |date=26 September 2022 |access-date=26 September 2022 }}</ref> sterling's value reached an all-time low of just over $1.03.<ref>{{cite news |url=https://www.bbc.com/news/business-63030208 | title=Pound hits record low after tax cut plans | work=BBC News |date=26 September 2022 |access-date=26 September 2022 }}</ref>

===Annual inflation rate===
[[File:Uk Inflation data.webp|thumb|upright 1.25|UK inflation data
{{legend-line|#00A2FF solid 4px|[[Consumer price index|CPI]]}}
{{legend-line|#61D836 solid 4px|CPIH (CPI+OOH)}}
{{legend-line|#929292 solid 4px|OOH [[Owner-occupancy|Owner occupied]] housing inflation}}
]]
The Bank of England had stated in 2009 that the decision had been taken to prevent the rate of [[inflation]] falling below the 2% target rate.<ref name=CNN1 /> [[Mervyn King, Baron King of Lothbury|Mervyn King]], the Governor of the Bank of England, had also suggested there were no other monetary options left, as [[interest rates]] had already been cut to their lowest level ever (0.5%) and it was unlikely that they would be cut further.<ref name=Times />

The inflation rate rose in following years, reaching 5.2% per year (based on the [[Consumer Price Index (United Kingdom)|Consumer Price Index]]) in September 2011, then decreased to around 2.5% the following year.<ref>{{Cite news |last1=Rogers |first1=Simon |last2=Sedghi |first2=Ami |date=12 November 2013 |title=UK inflation since 1948 |work=[[The Guardian]] |location=London |url=https://www.theguardian.com/news/datablog/2009/mar/09/inflation-economics |access-date=14 February 2014 |archive-date=17 May 2017 |archive-url=https://web.archive.org/web/20170517075908/https://www.theguardian.com/news/datablog/2009/mar/09/inflation-economics |url-status=live }}</ref> After a number of years when inflation remained near or below the Bank's 2% target, 2021 saw a significant and sustained increase on all indices: {{as of|November 2021|lc=on}}, [[Retail Price Index|RPI]] had reached 7.1%, [[Consumer Price Index|CPI]] 5.1% and [[CPIH]] 4.6%.<ref name="ONS 15/12/21">{{cite web |title=Inflation and price indices |publisher=[[Office for National Statistics]] |date=15 December 2021 |url=https://www.ons.gov.uk/economy/inflationandpriceindices |access-date=14 March 2017 |archive-date=15 March 2017 |archive-url=https://web.archive.org/web/20170315014653/https://www.ons.gov.uk/economy/inflationandpriceindices |url-status=live }}</ref>

==Coins==
{{Main|Coins of the pound sterling}}

===Pre-decimal coins===
The silver penny (plural: ''pence''; abbreviation: ''d'') was the principal and often the only coin in circulation from the 8th century until the 13th century. Although some fractions of the penny were struck (see [[farthing (British coin)|farthing]] and [[halfpenny (British coin)|halfpenny]]), it was more common to find pennies cut into halves and quarters to provide smaller change. Very few gold coins were struck, with the [[gold penny]] (equal in value to 20 silver pennies) a rare example. However, in 1279, the ''[[groat (coin)|groat]]'', worth 4''d'', was introduced, with the half groat following in 1344. 1344 also saw the establishment of a gold coinage with the introduction (after the failed [[florin (English coin)|gold florin]]) of the ''[[noble (English coin)|noble]]'' worth six shillings and eight pence (6/8''d'') (i.e. 3 nobles to the pound), together with the half and quarter noble. Reforms in 1464 saw a reduction in value of the coinage in both silver and gold, with the noble renamed the ''ryal'' and worth 10/– (i.e. 2 to the pound) and the ''[[angel (coin)|angel]]'' introduced at the noble's old value of 6/8''d''.

The reign of [[Henry VII of England|Henry VII]] saw the introduction of two important coins: the [[shilling]] (abbr.: ''s''; known as the ''testoon'', equivalent to twelve pence) in 1487 and the pound (known as the ''[[sovereign (British coin)|sovereign]]'', abbr.: ''£'' before numerals or "''l''." after them, equivalent to twenty shillings) in 1489. In 1526, several new denominations of gold coins were added, including the ''[[crown (British coin)|crown]]'' and ''[[half crown (British coin)|half crown]]'', worth five shillings (''5/–'') and two shillings and six pence (''2/6'', ''two and six'') respectively. [[Henry VIII of England|Henry VIII]]'s reign (1509–1547) saw a high level of [[debasement]] which continued into the reign of [[Edward VI]] (1547–1553). This debasement was halted in 1552, and new silver coinage was introduced, including coins for 1''d'', 2''d'', [[threepence (British coin)|3d]], 4''d'' and [[sixpence (British coin)|6''d'']], 1/–, 2/6''d'' and 5/–. In the reign of [[Elizabeth I]] (1558–1603), silver {{frac|3|4}}''d'' and {{frac|1|1|2}}''d'' coins were added, but these denominations did not last. Gold coins included the half-crown, crown, angel, half-sovereign (10/–) and sovereign (£1). Elizabeth's reign also saw the introduction of the horse-drawn screw press to produce the first "milled" coins.

Following the succession of the Scottish King [[James VI]] to the English throne, a new gold coinage was introduced, including the ''[[spur ryal]]'' (15/–), the ''[[unite (English coin)|unite]]'' (20/–) and the ''rose ryal'' (30/–). The ''[[laurel (English coin)|laurel]]'', worth 20/–, followed in 1619. The first base metal coins were also introduced: [[tin]] and [[copper]] [[farthing (British coin)|farthings]]. Copper [[halfpenny (British coin)|halfpenny]] coins followed in the reign of [[Charles I of England|Charles I]]. During the [[English Civil War]], a number of siege coinages were produced, often in unusual denominations.

Following the restoration of the monarchy in 1660, the coinage was reformed, with the ending of production of hammered coins in 1662. The ''[[guinea (British coin)|guinea]]'' was introduced in 1663, soon followed by the {{frac|1|2}}, 2 and 5 guinea coins. The silver coinage consisted of denominations of 1''d'', 2''d'', 3''d'', 4''d'' and 6''d'', 1/–, 2/6''d'' and 5/–. Due to the widespread export of silver in the 18th century, the production of silver coins gradually came to a halt, with the half crown and crown not issued after the 1750s, the 6''d'' and 1/– stopping production in the 1780s. In response, copper 1''d'' and 2''d'' coins and a gold {{frac|1|3}} guinea (7/–) were introduced in 1797. The copper penny was the only one of these coins to survive long.

To alleviate the shortage of silver coins, between 1797 and 1804, the Bank of England counterstamped [[Spanish dollar]]s (8 reales) and other [[Spanish real|Spanish]] and [[Spanish colonial real|Spanish colonial]] coins for circulation. A small counterstamp of the King's head was used. Until 1800, these circulated at a rate of 4/9''d'' for 8 reales. After 1800, a rate of 5/– for 8 reales was used. The Bank then issued silver tokens for 5/– (struck over Spanish dollars) in 1804, followed by tokens for 1/6''d'' and 3/– between 1811 and 1816.

In 1816, a new silver coinage was introduced in denominations of 6''d'', 1/–, 2/6''d'' (half-crown) and 5/– (crown). The crown was only issued intermittently until 1900. It was followed by a new gold coinage in 1817 consisting of 10/– and £1 coins, known as the half sovereign and [[sovereign (British coin)|sovereign]]. The silver 4''d'' coin was reintroduced in 1836, followed by the 3''d'' in 1838, with the 4''d'' coin issued only for colonial use after 1855. In 1848, the 2/– ''[[florin (British coin)|florin]]'' was introduced, followed by the short-lived [[double florin]] in 1887. In 1860, copper was replaced by bronze in the farthing (quarter penny, {{frac|1|4}}''d''), halfpenny and penny.

During the [[World War I|First World War]], production of the sovereign and [[half-sovereign]] was suspended, and although the [[gold standard]] was later restored, the coins saw little circulation thereafter. In 1920, the silver standard, maintained at .925 since 1552, was reduced to .500. In 1937, a nickel-brass 3''d'' coin was introduced; the last silver 3''d'' coins were issued seven years later. In 1947, the remaining silver coins were replaced with [[cupro-nickel]], with the exception of [[Maundy coinage]] which was then restored to .925. Inflation caused the farthing to cease production in 1956 and be demonetised in 1960. In the run-up to decimalisation, the halfpenny and half-crown were demonetised in 1969.

===Decimal coins===
{{Coin image box 2 singles
| header=[[One pound (British decimal coin)|£1]] coin (new design, 2016)
| image_left=File:British 12 sided pound coin.png
| image_right=File:British 12 sided pound coin reverse.png
| caption_left=[[Elizabeth II]]
| caption_right=English [[Tudor rose|rose]], [[Leek#Cultural significance|Welsh leek]], [[Thistle#Scottish thistle|Scottish thistle]], and Northern Irish [[shamrock]]
| width_left=130
| width_right=130
| position=right
| margin=0
}}
British coinage timeline:
* 1968: The first [[coins of the pound sterling|decimal coins]] were introduced. These were [[cupro-nickel]] [[Five pence (British decimal coin)|5p]] and [[ten pence (British decimal coin)|10p coin]]s which were the same size as, equivalent in value to, and circulated alongside, the [[Shilling (British coin)|one shilling coin]] and the [[Florin (British coin)|florin (two shilling coin)]] respectively.
* 1969: The curved equilateral [[heptagon]]al cupro-nickel [[fifty pence (British decimal coin)|50p coin]] replaced the [[Bank of England 10 shilling note|ten shilling note]] (10/–).
* 1970: The [[Half crown (British coin)|half crown]] (2/6''d'', 12.5p) was [[demonetised]].
* 1971: The decimal coinage was completed when decimalisation came into effect in 1971 with the introduction of the bronze [[Halfpenny (British decimal coin)|half new penny]] ({{frac|1|2}}p), [[Penny (British decimal coin)|new penny]] (1p), and [[Two pence (British decimal coin)|two new pence]] (2p) coins and the withdrawal of the [[Penny (British pre-decimal coin)|(old) penny]] (1''d'') and [[Threepence (British coin)|(old) threepence]] (3''d'') coins.
* 1980: Withdrawal of the [[Sixpence (British coin)|sixpence]] (6''d'') coin, which had continued in circulation at a value of {{frac|2|1|2}}p.
* 1982: The word "new" was dropped from the coinage and a [[Twenty pence (British decimal coin)|20p coin]] was introduced.
* 1983: A (round, brass) [[one pound (British decimal coin)|£1 coin]] was introduced.
* 1983: The {{frac|1|2}}p coin was last produced.
* 1984: The {{frac|1|2}}p coin was withdrawn from circulation.
* 1990: The [[Crown (British coin)|crown]], historically valued at five shillings (25p), was re-tariffed for future issues as a commemorative coin at £5.
* 1990: A new [[five pence (British decimal coin)|5p coin]] was introduced, replacing the original size that had been the same as the [[Shilling (British coin)|shilling coins]] of the same value that it had in turn replaced. These first generation 5p coins and any remaining old shilling coins were withdrawn from circulation in 1991.
*1992: A new [[ten pence (British decimal coin)|10p coin]] was introduced, replacing the original size that had been the same as the [[Florin (British coin)|florin or two shilling coins]] of the same value that it had in turn replaced. These first generation 10p coins and any remaining old florin coins were withdrawn from circulation over the following two years.
* 1992: [[Penny (British decimal coin)|1p]] and [[Two pence (British decimal coin)|2p]] coins began to be minted in [[Copper electroplating|copper-plated]] [[steel]] (the original [[bronze]] coins continued in circulation).
* 1997: A new [[fifty pence (British decimal coin)|50p]] coin was introduced, replacing the original size that had been in use since 1969, and the first generation 50p coins were withdrawn from circulation.
* 1998: The [[bi-metallic coins|bi-metallic]] [[Two pounds (British coin)|£2 coin]] was introduced.
* 2007: By now the value of copper in the pre-1992 [[Penny (British decimal coin)|1p]] and [[Two pence (British decimal coin)|2p]] coins (which are 97% copper) exceeded those coins' face value to such an extent that melting down the coins by [[entrepreneur]]s was becoming worthwhile (with a premium of up to 11%, with smelting costs reducing this to around 4%)—although this is illegal, and the [[market value]] of copper has subsequently fallen dramatically from these earlier peaks.
* In April 2008, an extensive redesign of the coinage was unveiled. The [[Penny (British decimal coin)|1p]], [[Two pence (British decimal coin)|2p]], [[five pence (British decimal coin)|5p]], [[ten pence (British decimal coin)|10p]], [[twenty pence (British decimal coin)|20p]], and [[fifty pence (British decimal coin)|50p]] coins feature parts of the [[Royal coat of arms of the United Kingdom|Royal Shield]] on their reverse; and the reverse of the pound coin showed the whole shield. The coins were issued gradually into circulation, starting in mid-2008. They have the same sizes, shapes and weights as those with the old designs which, apart from the round pound coin which was withdrawn in 2017, continue to circulate.
* 2012: The [[five pence (British decimal coin)|5p]] and [[Ten pence (British decimal coin)|10p]] coins were changed from cupro-nickel to [[Nickel electroplating|nickel-plated steel]].
* 2017: A more secure twelve-sided bi-metallic £1 coin was introduced to reduce forgery. The old round £1 coin ceased to be legal tender on 15 October 2017.<ref name="newpoundcoin">{{cite web |title=The new 12-sided £1 coin |url=https://www.thenewpoundcoin.com/ |url-status=dead |archive-url=https://web.archive.org/web/20170708180156/https://www.thenewpoundcoin.com/ |archive-date=8 July 2017 |access-date=8 July 2017 |website=The New Pound Coin |publisher=[[The Royal Mint]]}}</ref>

{{as of|2020}}, the oldest circulating coins in the UK are the [[Penny (British decimal coin)|1p]] and [[Two pence (British decimal coin)|2p]] copper coins introduced in 1971. No other coins from before 1982 are in circulation. Prior to the withdrawal from circulation in 1992, the oldest circulating coins usually dated from 1947: although older coins were still legal tender, inflation meant that their silver content was worth more than their face value, so they tended to be [[Gresham's law|removed from circulation and hoarded]]. Before decimalisation in 1971, a handful of change might have contained coins over 100 years old, bearing any of five monarchs' heads, especially in the copper coins.

==Banknotes==
{{Main|Banknotes of the pound sterling}}
[[File:Pound sterling banknotes.png|right|upright=0.9|thumb|Selection of current sterling banknotes printed by all banks]]
The first sterling notes were issued by the [[Bank of England]] shortly after its foundation in 1694. Denominations were initially handwritten on the notes at the time of issue. From 1745, the notes were printed in denominations between £20 and £1,000, with any odd shillings added by hand. £10 notes were added in 1759, followed by £5 in 1793 and £1 and £2 in 1797. The lowest two denominations were withdrawn after the end of the [[Napoleonic wars]]. In 1855, the notes were converted to being entirely printed, with denominations of £5, £10, £20, £50, £100, £200, £300, £500 and £1,000 issued.

The [[Bank of Scotland]] began issuing notes in 1695. Although the [[pound Scots]] was still the currency of Scotland, these notes were denominated in sterling in values up to £100. From 1727, the [[Royal Bank of Scotland]] also issued notes. Both banks issued some notes denominated in guineas as well as pounds. In the 19th century, regulations limited the smallest note issued by Scottish banks to be the £1 denomination, a note not permitted in England.

With the extension of sterling to Ireland in 1825, the [[Bank of Ireland]] began issuing sterling notes, later followed by other Irish banks. These notes included the unusual denominations of 30/– and £3. The highest denomination issued by the Irish banks was £100.

In 1826, banks at least {{convert|65|mi|km}} from London were given permission to issue their own paper money. From 1844, new banks were excluded from issuing notes in England and Wales but not in Scotland and Ireland. Consequently, the number of private banknotes dwindled in England and Wales but proliferated in Scotland and Ireland. The last English private banknotes were issued in 1921.

In 1914, the [[HM Treasury|Treasury]] introduced notes for 10/– and £1 to replace gold coins. These circulated until 1928 when they were replaced by Bank of England notes. Irish independence reduced the number of Irish banks issuing sterling notes to five operating in Northern Ireland. The [[World War II|Second World War]] had a drastic effect on the note production of the Bank of England. Fearful of mass forgery by the [[Nazi]]s (see [[Operation Bernhard]]), all notes for £10 and above ceased production, leaving the bank to issue only 10/–, £1 and £5 notes. Scottish and Northern Irish issues were unaffected, with issues in denominations of £1, £5, £10, £20, £50 and £100.

Due to repeated devaluations and spiralling inflation the Bank of England reintroduced £10 notes in 1964. In 1969, the 10/– note was replaced by the 50p coin, again due to inflation. £20 Bank of England notes were reintroduced in 1970, followed by £50 in 1981.<ref>{{cite web |title=Notes recently withdrawn from circulation |url=http://www.bankofengland.co.uk/banknotes/Pages/about/withdrawn_notes.aspx |publisher=Bank of England |access-date=31 July 2013 |archive-date=10 November 2013 |archive-url=https://web.archive.org/web/20131110075747/http://www.bankofengland.co.uk/banknotes/Pages/about/withdrawn_notes.aspx |url-status=dead }}</ref> A £1 coin was introduced in 1983, and Bank of England £1 notes were withdrawn in 1988. Scottish and Northern Irish banks followed, with only the Royal Bank of Scotland continuing to issue this denomination.

UK notes include raised print (e.g. on the words "Bank of England"); watermarks; embedded metallic thread; holograms; and fluorescent ink visible only under [[UV lamp]]s. Three printing techniques are involved: [[offset litho]], [[intaglio (printmaking)|intaglio]] and [[letterpress]]; and the notes incorporate a total of 85 specialized inks.<ref>{{Cite magazine |last=Higginbotham |first=Adam |title=The inkjet counterfeiter (Wired UK) |magazine=Wired UK |url=https://www.wired.co.uk/magazine/archive/2009/11/features/the-inkjet-counterfeiter |access-date=28 July 2014 |publisher=Wired |archive-date=12 August 2014 |archive-url=https://web.archive.org/web/20140812193341/http://www.wired.co.uk/magazine/archive/2009/11/features/the-inkjet-counterfeiter |url-status=live }}</ref>

The Bank of England produces notes named "[[Bank of England £1,000,000 note|giant]]" and "[[Bank of England £100,000,000 note|titan]]". A giant is a one million pound note, and a titan is a one hundred million pound bank note.<ref>{{Cite news |last=Bowlby |first=Chris |date=26 January 2013 |title=Britain's £1m and £100m banknotes |work=BBC News |url=https://www.bbc.co.uk/news/magazine-21145103 |access-date=14 February 2014 |archive-date=16 February 2014 |archive-url=https://web.archive.org/web/20140216085646/http://www.bbc.co.uk/news/magazine-21145103 |url-status=live }}</ref> Giants and titans are used only within the [[banking system]].<ref>{{cite web |title=Security by Design – A closer look at Bank of England notes |url=http://bankofengland.co.uk/archive/Documents/archivedocs/freshfields/securitybydesign.pdf |archive-url=https://web.archive.org/web/20160507121857/http://bankofengland.co.uk/archive/Documents/archivedocs/freshfields/securitybydesign.pdf |url-status=dead |archive-date=7 May 2016 <!--search doesn't work, but it's on the last page-->|access-date=6 November 2011 |publisher=Bank of England}}</ref>

===Polymer banknotes===
The [[Northern Bank £5 note]], issued by Northern Ireland's [[Northern Bank]] (now [[Danske Bank (Northern Ireland)|Danske Bank]]) in 2000, was the only [[polymer banknote]] in circulation until 2016. The Bank of England introduced £5 polymer banknotes in September 2016, and the paper £5 notes were withdrawn on 5 May 2017. A polymer £10 banknote was introduced on 14 September 2017, and the paper note was withdrawn on 1 March 2018. A polymer £20 banknote was introduced on 20 February 2020, followed by a polymer £50 in 2021.<ref>{{cite web |title=Polymer banknotes |url=http://www.bankofengland.co.uk/banknotes/polymer-banknotes |access-date=14 August 2019 |website=www.bankofengland.co.uk |archive-date=24 July 2019 |archive-url=https://web.archive.org/web/20190724191844/https://www.bankofengland.co.uk/banknotes/polymer-banknotes |url-status=live }}</ref>

==Monetary policy==
As the [[central bank]] of the United Kingdom which has been delegated authority by the government, the [[Bank of England]] sets the [[monetary policy]] for the British pound by controlling the amount of money in circulation. It has a monopoly on the issuance of banknotes in England and Wales and regulates the amount of banknotes issued by seven authorized banks in Scotland and Northern Ireland.<ref>{{cite news |title=Scottish and Northern Ireland banknotes |url=https://www.bankofengland.co.uk/banknotes/scottish-and-northern-ireland-banknotes |access-date=12 December 2021 |publisher=Bank of England |archive-date=3 May 2019 |archive-url=https://web.archive.org/web/20190503122015/https://www.bankofengland.co.uk/banknotes/scottish-and-northern-ireland-banknotes |url-status=live }}</ref> [[HM Treasury]] has reserve powers to give orders to the committee "if they are required in the public interest and by extreme economic circumstances" but such orders must be endorsed by Parliament within 28 days.<ref>{{cite web |title=Act of Parliament gives devolved responsibility to the MPC with reserve powers for the Treasury |url=http://www.opsi.gov.uk/acts/acts1998/ukpga_19980011_en_3#pt2-pb4-l1g19 |access-date=10 May 2010 |publisher=Opsi.gov.uk |archive-date=14 March 2010 |archive-url=https://web.archive.org/web/20100314153711/http://www.opsi.gov.uk/Acts/acts1998/ukpga_19980011_en_3#pt2-pb4-l1g19 |url-status=live }}</ref>

Unlike banknotes which have separate issuers in Scotland and Northern Ireland, all British coins are issued by the [[Royal Mint]], an independent enterprise (wholly owned by the [[HM Treasury|Treasury]]) which also mints coins for other countries.

==Legal tender and national issues==
[[File:Sterling area.svg|thumb|right|The [[British Islands]] (red) and overseas territories (blue) using sterling or their local issue]]
[[Legal tender]] in the United Kingdom is defined such that "a debtor cannot successfully be sued for non-payment if he pays into court in legal tender." Parties can alternatively settle a debt by other means with mutual consent. Strictly speaking, it is necessary for the debtor to offer the exact amount due as there is no obligation for the other party to provide change.<ref name="Mint_LT">{{cite web |title=Legal Tender Guidelines |url=http://www.royalmint.com/aboutus/policies-and-guidelines/legal-tender-guidelines |access-date=13 May 2014 |website=Royal Mint |archive-date=9 April 2014 |archive-url=https://web.archive.org/web/20140409052301/http://www.royalmint.com/aboutus/policies-and-guidelines/legal-tender-guidelines |url-status=live }}</ref>

Throughout the UK, £1 and £2 coins are legal tender for any amount, with the other coins being legal tender only for limited amounts. [[Bank of England]] notes are legal tender for any amount in [[England and Wales]], but not in Scotland or Northern Ireland.<ref name=Mint_LT/> (Bank of England 10/– and £1 notes were legal tender, as were Scottish banknotes, during [[World War II]] under the [[Currency (Defence) Act 1939]], which was repealed on 1 January 1946.) [[Channel Islands]] and [[Isle of Man|Manx]] banknotes are legal tender only in their respective jurisdictions.<ref>{{cite web |title=Can I use coins from Guernsey, Jersey, Gibraltar and the Isle of Man in the United Kingdom? Why are they made to the same specifications as British coins? |url=http://www.royalmintmuseum.org.uk/FAQRetrieve.aspx?ID=49900 |access-date=5 July 2018 |website=www.royalmintmuseum.org.uk |archive-date=6 July 2018 |archive-url=https://web.archive.org/web/20180706021741/http://www.royalmintmuseum.org.uk/FAQRetrieve.aspx?ID=49900 |url-status=live }}</ref>

Bank of England, Scottish, Northern Irish, Channel Islands, Isle of Man, Gibraltar, and Falkland banknotes may be offered anywhere in the UK, although there is no obligation to accept them as a means of payment, and acceptance varies. For example, merchants in England generally accept Scottish and Northern Irish notes, but some unfamiliar with them may reject them.<ref>{{Cite news |last=King |first=Mark |date=12 September 2012 |title=Can I spend Scottish money in England? |work=The Guardian |location=London |url=https://www.theguardian.com/money/2012/sep/12/can-i-spend-scottish-money-england |access-date=28 July 2014 |archive-date=21 October 2014 |archive-url=https://web.archive.org/web/20141021232324/http://www.theguardian.com/money/2012/sep/12/can-i-spend-scottish-money-england |url-status=live }}</ref> However, Scottish and Northern Irish notes both tend to be accepted in Scotland and Northern Ireland, respectively. Merchants in England generally do not accept Jersey, Guernsey, Manx, Gibraltarian, and Falkland notes but Manx notes are generally accepted in Northern Ireland.<ref>{{cite web |title=Currency used in Northern Ireland |url=https://www.discoveringireland.com/currency-northern-ireland/ |access-date=5 July 2018 |website=www.discoveringireland.com |archive-date=5 July 2018 |archive-url=https://web.archive.org/web/20180705235121/https://www.discoveringireland.com/currency-northern-ireland/ |url-status=live }}</ref> Bank of England notes are generally accepted in the Falklands and Gibraltar, but for example, Scottish and Northern Irish notes are not.<ref>{{cite web |title=Foreign travel advice: Gibraltar |url=https://www.gov.uk/foreign-travel-advice/gibraltar/money |access-date=23 March 2014 |archive-date=24 March 2014 |archive-url=https://web.archive.org/web/20140324201105/https://www.gov.uk/foreign-travel-advice/gibraltar/money |url-status=live }}</ref> Since all of the notes are denominated in sterling, banks will exchange them for locally issued notes at face value,<ref>{{cite web |title=100 Falkland Island Pounds to GBP |url=https://fkp.mconvert.net/gbp/100 |access-date=10 August 2018 |archive-date=10 August 2018 |archive-url=https://web.archive.org/web/20180810174806/https://fkp.mconvert.net/gbp/100 |url-status=live }}</ref>{{Failed verification|date=May 2019}} though some in the UK have had trouble exchanging Falkland Islands notes.<ref name="Falklands">{{cite web |title=Foreign travel advice: Falkland Islands |url=https://www.gov.uk/foreign-travel-advice/falkland-islands/money |access-date=24 March 2014 |archive-date=14 June 2014 |archive-url=https://web.archive.org/web/20140614090738/https://www.gov.uk/foreign-travel-advice/falkland-islands/money |url-status=live }}</ref>

Commemorative [[Five pounds (British decimal coin)|£5]] and [[British twenty-five pence coin|25p]] (crown) coins, and [[Sixpence (British coin)#2016 decimal sixpence|decimal sixpences]] (6p, not the [[Sixpence (British coin)|pre-decimalisation 6''d'']], equivalent to {{Fraction|2|1|2}}p) made for traditional wedding ceremonies and Christmas gifts, although rarely if ever seen in circulation, are formally [[legal tender]],<ref>{{cite news |title=Man arrested for using £100 coin in Tesco wins £5,000 in damages |work=Liverpool Echo |first1=Ryan |last1=Paton |first2=Chloe |last2=Parkman |date=29 October 2021 |access-date=3 November 2021 |url=https://www.liverpoolecho.co.uk/news/uk-world-news/man-arrested-using-100-coin-22002870 |archive-date=31 October 2021 |archive-url=https://web.archive.org/web/20211031203138/https://www.liverpoolecho.co.uk/news/uk-world-news/man-arrested-using-100-coin-22002870 |url-status=live }}</ref> as are the [[bullion coin]]s issued by the Mint.

{| class="wikitable"
|-
! Coin
! Maximum usable as legal tender<ref>{{cite web |title=British Royal Mint – What are the legal tender amounts acceptable for the United Kingdom coins? |url=http://www.royalmint.com/help/help/legal-tender-amounts |url-status=dead |archive-url=https://web.archive.org/web/20140310214242/http://www.royalmint.com/help/help/legal-tender-amounts |archive-date=10 March 2014 |access-date=10 March 2014}}</ref>
|-
| [[One hundred pounds (British coin)|£100 (produced from 2015)]]<ref name=Mint_LT/>
| unlimited
|-
| [[Twenty pounds (British coin)|£20 (produced from 2013)]]
| unlimited
|-
| [[Five pounds (British coin)|£5 (post-1990 crown)]]
| unlimited
|-
| £2
| unlimited
|-
| £1
| unlimited
|-
| 50p
| £10
|-
| 25p (pre-1990 crown)
| £10
|-
| 20p
| £10
|-
| 10p
| £5
|-
| 5p
| £5
|-
| 2p
| 20p
|-
| 1p
| 20p
|}

===Pegged currencies===
In Britain's [[Crown Dependencies]], the [[Manx pound]], [[Jersey pound]], and [[Guernsey pound]] are unregulated by the Bank of England and are issued independently.<ref>{{cite web |title=Other British Islands' Notes |url=http://www.bankofengland.co.uk/banknotes/Pages/about/other_notes.aspx |access-date=28 July 2014 |publisher=Bank of England |archive-date=21 July 2017 |archive-url=https://web.archive.org/web/20170721035725/http://www.bankofengland.co.uk/banknotes/Pages/about/other_notes.aspx |url-status=dead }}</ref> However, they are maintained at a [[fixed exchange rate]] by their respective governments, and Bank of England notes have been made legal tender on the islands, forming a sort of one-way de facto [[currency union]]. Internationally they are considered local issues of sterling so do not have [[ISO 4217]] codes. "GBP" is usually used to represent all of them; informal abbreviations resembling ISO codes are used where the distinction is important.

[[British Overseas Territories]] are responsible for the monetary policy of their own currencies (where they exist),<ref>{{cite web |date=11 July 2014 |title=Can I use coinage from United Kingdom Overseas Territories? |url=http://www.royalmint.com/help/help/spending-overseas-coins-in-the-uk |url-status=dead |archive-url=https://web.archive.org/web/20170614172729/http://www.royalmint.com/help/help/spending-overseas-coins-in-the-uk |archive-date=14 June 2017 |access-date=28 July 2014 |publisher=royalmint.com}}</ref> and have their own ISO 4217 codes. The [[Falkland Islands pound]], [[Gibraltar pound]], and [[Saint Helena pound]] are set at a fixed 1:1 exchange rate with the British pound by local governments.

==Value==
In 2006, the [[House of Commons Library]] published a research paper which included an index of prices for each year between 1750 and 2005, where 1974 was indexed at 100.<ref>{{Cite report |url=http://www.parliament.uk/briefing-papers/RP06-09.pdf |title=Inflation: the value of the pound 1750–2005 |last=Webb |first=Dominic |date=13 February 2006 |publisher=[[House of Commons Library]] |url-status=dead| archive-url=https://web.archive.org/web/20111123051206if_/http://www.parliament.uk/Templates/BriefingPapers/Pages/BPPdfDownload.aspx?bp-id=RP06-09|archive-date=23 November 2011|access-date=21 July 2022}}</ref>

Regarding the period 1750–1914 the document states: "Although there was considerable year on year fluctuation in price levels prior to 1914 (reflecting the quality of the harvest, wars, etc.) there was not the long-term steady increase in prices associated with the period since 1945". It goes on to say that "Since 1945 prices have risen in every year with an aggregate rise of over 27 times".

The value of the index in 1751 was 5.1, increasing to a peak of 16.3 in 1813 before declining very soon after the end of the [[Napoleonic Wars]] to around 10.0 and remaining in the range 8.5–10.0 at the end of the 19th century. The index was 9.8 in 1914 and peaked at 25.3 in 1920, before declining to 15.8 in 1933 and 1934—prices were only about three times as high as they had been 180 years earlier.<ref>{{Cite journal |last1=O'Donoghue |first1=Jim |last2=Goulding |first2=Louise |last3=Allen |first3=Grahame |date=March 2004 |title=Consumer Price Inflation since 1750 |url=http://www.ons.gov.uk/ons/rel/elmr/economic-trends--discontinued-/no--604--march-2004/consumer-price-inflation-since-1750.pdf |journal=Economic Trends |publisher=[[Office for National Statistics]] |issue=604 |pages=38–46 |isbn=0-11-621671-9 |issn=0013-0400 |access-date=14 February 2014 |archive-date=22 February 2014 |archive-url=https://web.archive.org/web/20140222023557/http://www.ons.gov.uk/ons/rel/elmr/economic-trends--discontinued-/no--604--march-2004/consumer-price-inflation-since-1750.pdf |url-status=live }}</ref>

[[Inflation]] has had a dramatic effect during and after [[World War II]]: the index was 20.2 in 1940, 33.0 in 1950, 49.1 in 1960, 73.1 in 1970, 263.7 in 1980, 497.5 in 1990, 671.8 in 2000 and 757.3 in 2005. The smallest coin in 1971 was the {{frac|1|2}}p, worth about 6.4p in 2015 prices.

The following table shows the equivalent amount of goods and services that, in a particular year, could be purchased with £1.<ref>{{cite web |title=Measuring Worth – Purchasing Power of Money in the United Kingdom from 1971 to 2009 |url=http://www.measuringworth.com/ukcompare/index.php |url-status=dead |archive-url=https://web.archive.org/web/20100403094220/http://www.measuringworth.com/ukcompare/index.php |archive-date=3 April 2010 |access-date=22 April 2010}}</ref>

The table shows that from 1971 to 2023, the buying power of a pound fell by 94.4%.
<!--Note: In order to give more precision, I used the website to get the prices index in year X and then inverted this to give the number in the table.-->
{| class="wikitable" style="text-align:left"
|+ Buying power of one pound compared to its value in 1971 
!&nbsp;Year
!style="width: 40pt; font-size:95%"|&nbsp;Equivalent&nbsp; buying power

!&nbsp;Year
!style="width: 40pt; font-size:95%"|&nbsp;Equivalent&nbsp; buying power
!&nbsp;Year
!style="width: 40pt; font-size:95%"|&nbsp;Equivalent&nbsp; buying power
!&nbsp;Year
!style="width: 40pt; font-size:95%"|&nbsp;Equivalent&nbsp; buying power
!&nbsp;Year
!style="width: 40pt; font-size:95%"|&nbsp;Equivalent&nbsp; buying power
!&nbsp;Year
!style="width: 40pt; font-size:95%"|&nbsp;Equivalent&nbsp; buying power
|-
|1971||&nbsp;£1.00||1981||&nbsp;£0.271||1991||&nbsp;£0.152||2001||&nbsp;£0.117||2011||&nbsp;£0.0900||2021||&nbsp;£0.0678
|-
|1972||&nbsp;£0.935||1982||&nbsp;£0.250||1992||&nbsp;£0.146||2002||&nbsp;£0.115||2012||&nbsp;£0.0850||2022||&nbsp;£0.0612
|-
|1973||&nbsp;£0.855||1983||&nbsp;£0.239||1993||&nbsp;£0.144||2003||&nbsp;£0.112||2013||&nbsp;£0.0826||2023||&nbsp;£0.0560
|-
|1974||&nbsp;£0.735||1984||&nbsp;£0.227||1994||&nbsp;£0.141||2004||&nbsp;£0.109||2014||&nbsp;£0.0800
|-
|1975||&nbsp;£0.592||1985||&nbsp;£0.214||1995||&nbsp;£0.136||2005||&nbsp;£0.106||2015||&nbsp;£0.0780
|-
|1976||&nbsp;£0.510||1986||&nbsp;£0.207||1996||&nbsp;£0.133||2006||&nbsp;£0.102||2016||&nbsp;£0.0777
|-
|1977||&nbsp;£0.439||1987||&nbsp;£0.199||1997||&nbsp;£0.123||2007||&nbsp;£0.0980||2017||&nbsp;£0.0744
|-
|1978||&nbsp;£0.407||1988||&nbsp;£0.190||1998||&nbsp;£0.125||2008||&nbsp;£0.0943||2018||&nbsp;£0.0726
|-
|1979||&nbsp;£0.358||1989||&nbsp;£0.176||1999||&nbsp;£0.123||2009||&nbsp;£0.0952||2019||&nbsp;£0.0707
|-
|1980||&nbsp;£0.303||1990||&nbsp;£0.161||2000||&nbsp;£0.119||2010||&nbsp;£0.0910||2020||&nbsp;£0.0695
|}

For example, the purchasing power of a pound in 2006 was slightly more than that of 10p in 1971; conversely, the purchasing power of a pound in 1971 was slightly less than that of £10 in 2006. The mythical "shopping basket" of goods and services that cost £10 in 1971 would cost £98.04 in 2006 (and  £163.40 in 2022).

==Exchange rate==
Sterling is freely bought and sold on the [[foreign exchange market]]s around the world, and its value relative to other currencies therefore fluctuates.

{{Exchange rate|GBP}} <!-- The Exchange Rate template expects just one argument: the ISO code for the currency referenced in the article - in this case, GBP. Any other arguments are ignored. The template gives the conversion rate between the subject currency into and the top ten or eleven most traded currencies. If your favourite currency is not listed, ask Google for today's rate. -->

==Reserve==
Sterling is used as a [[reserve currency]] around the world. {{As of|2020}}, it is ranked fourth in value held as reserves.

{{Reserve currencies}}

==See also==
{{Portal|Europe|Money|Numismatics|United Kingdom}}
* [[Commonwealth banknote-issuing institutions]]
* [[List of British currencies]]
* [[List of currencies in Europe]]
* [[List of the largest trading partners of United Kingdom]]
* [[Pound (currency)]]{{snd}}other currencies with a "pound" unit of account.

==Footnotes==
{{Notelist}}

==References==
{{reflist}}

==Further reading==
{{refbegin}}
* {{cite web |title=Bank of England Banknotes FAQ |url=http://www.bankofengland.co.uk/banknotes/about/faqs.htm |access-date=7 May 2006 |archive-date=12 October 2007 |archive-url=https://web.archive.org/web/20071012030427/http://www.bankofengland.co.uk/banknotes/about/faqs.htm |url-status=dead }}
* ''The Perspective of the World'', Vol III of ''Civilisation and Capitalism'', [[Fernand Braudel]], 1984 {{ISBN|1-84212-289-4}} (in French 1979).
* ''A Retrospective on the Bretton Woods System : Lessons for International Monetary Reform (National Bureau of Economic Research Project Report)'' By Barry Eichengreen (Editor), Michael D. Bordo (Editor) Published by [[University of Chicago Press]] (1993) {{ISBN|0-226-06587-1}}
* ''The political pound: British investment overseas and exchange controls past—and future?'' By John Brennan Published By Henderson Administration (1983) {{ISBN|0-9508735-0-0}}
* ''Monetary History of the United States, 1867–1960'' by Milton Friedman, Anna Jacobson Schwartz Published by [[Princeton University Press]] (1971) {{ISBN|0-691-00354-8}}
* ''The international role of the pound sterling: Its benefits and costs to the United Kingdom'' By John Kevin Green
* ''The Financial System in Nineteenth-Century Britain (The Victorian Archives Series)'', By Mary Poovey Published by [[Oxford University Press]] (2002) {{ISBN|0-19-515057-0}}
* ''Rethinking our Centralised Monetary System: The Case for a System of Local Currencies'' By Lewis D. Solomon Published by Praeger Publishers (1996) {{ISBN|0-275-95376-9}}
* ''Politics and the Pound: The Conservatives' Struggle With Sterling'' by Philip Stephens Trans-Atlantic Publications (1995) {{ISBN|0-333-63296-6}}
* ''The European Monetary System: Developments and Perspectives (Occasional Paper, No. 73)'' by Horst Ungerer, Jouko J. Hauvonen Published by International Monetary Fund (1990) {{ISBN|1-55775-172-2}}
* ''The floating pound sterling of the nineteen-thirties: An exploratory study'' By J. K Whitaker Dept. of the Treasury (1986)
* ''World Currency Monitor Annual, 1976–1989: Pound Sterling : The Value of the British Pound Sterling in Foreign Terms'' Published by Mecklermedia (1990) {{ISBN|0-88736-543-4}}
* {{numis cite SCWC|date=1991}}
* {{numis cite SCWPM|date=1994}}
* {{numis cite SCWPM|date=1990.s}}
{{refend}}

==External links==
{{commons category|Pound Sterling}}
* {{official website|https://www.royalmint.com/}} of the [[Royal Mint]]
* [https://www.bbc.com/news/topics/cx250jmk4e7t/pound-sterling-gbp Pound Sterling] – [[BBC News]] ([[Foreign exchange market]] news)
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