This article is about Sterling or Pound
Sterling, the currency
of the United
Kingdom and its dependencies.
The basic currency unit of Sterling is now the pound
- hence Pound Sterling, which strictly speaking refers
to the currency unit rather than the currency.
The Standard ISO
4217 currency code is GBP.
Sign: £ (or "L"; both from Latin libra = pound).
£1 = 100 pence (p) (singular penny).
Pre-1971 £1 = 20 shillings
(s.; colloquially "bob"), 1 shilling = 12 pence (d.);
hence "Lsd" as shorthand for predecimalisation values. Note that
the pre- and - post decimalisation penny had different values (the
pound was constant), so the latter were known as "new pence" for
their first few years. UKP is a non-standard abbreviation.
In modern times the pound has become the basic unit of currency.
Inflation has steadily eroded the value of currency. The basic unit
was once the penny. Originally a silver penny of 1.555 grams (1/240
pound troy) had the purchasing power of slightly less than a modern
In the UK, to distinguish the currency from the weight, and from
other currencies, a pound is often referred to as a pound sterling
or sometimes just sterling. The sterling
was originally an old English silver coin made of sterling
silver and weighing 1.555 grams (1/240th of a troy pound).
As a unit of currency, the term pound originates
from the value of a Troy pound
weight of high purity silver known as sterling
Sterling (with a basic currency unit of the Tealby Penny,
rather than the pound) was introduced as the English currency by
Henry II in 1158,
though the name Sterling wasn't acquired until later.
Sterling unofficially moved to the gold
standard from silver in 1717
thanks to Sir Isaac
Newton, who was Master of the Royal
Mint, and the use of silver declined until the official adoption
of the gold standard following the end of the Napoleonic
Wars, in 1821.
This lasted until Britain, in common with many other countries,
abandoned the standard during World
War I, in 1919.
A variation on the gold standard was re-introduced in 1926,
under which the currency was pegged to the gold price, although
people were only able to exchange their currency for gold bullion,
rather than for coins. This was abandoned on September
and Sterling devalued 20%. In common with all other world currencies,
there is no longer any link to precious metals. The US
dollar was the last to leave gold, in 1971.
As a member of the European
Union, the UK has the option of adopting the euro
as its currency. However the subject remains politically controvesial,
not least since the UK was forced to withdraw from its precursor,
Exchange Rate Mechanism (ERM) on Black Wednesday (September
Black Wednesday saw interest rates from 10% to 12%, and then to
15% in a futile attempt to stop the pound falling below the ERM
limits, costing the country tens of billions of pounds.
In 1999 the House
of Commons Library published a research
paper (PDF document) which included an index of the value of the
Pound for each year between 1750 and 1998, where the value in 1974
was indexed at 100.
Reading this document, one is struck by the fact that the value
of the Pound remained remarkably constant for the whole of the period
until the First
World War, allowing for inflationary fluctuations in wartime
and with many periods when prices declined. The value of the index
in 1750 was 5.0, increasing to a peak of 16.0 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 nineteenth century. The index was 9.6 in 1914 and
peaked at 24.8 in 1920, before declining again to 15.5 in 1933 and
1934 i.e prices were only about three times higher than they had
been 180 years earlier.
really kicked off during and after the Second
World War - the index was 20.0 in 1940, 32.9 in 1950, 46.4 in
1960, 68.2 in 1970, 243.0 in 1980, 458.5 in 1990, and 592.3 in 1998.