What is the full form of GBP?

Introduction

Great Britain Pound (GBP) is the British official currency; it stands for “Great Britain Pound”. It is a code name for “British Pound Sterling”. The smallest unit of GBP is the “Penny”. The “British Pound” is the “fourth most traded currency in World”.

Apart from the British, it is the official currency of “some territories like the Isle of Man, British Antarctic Territory, Saint Helena, South Georgia etc”. It is propagated by the “Bank of England”.

Historical background of GBP

The origin of Pound is in Europe in Roman Era. The word ‘Pound’ comes from the word “Poundus” which means weight.

• Its symbol is “£” which comes from the “Ornate L in Libra”.

• In Early “775 AD” “Anglo-Saxon England” it was a piece of currency used in large amounts at that time.

• The “king of England” was the first to adopt it as a national currency in 928.

• In “1694 King Willian III” established the Bank of England after the defeat of England by France to raise funds.

• In “1717” value Sterling was first valued in Gold then in silver. At that time the price of gold was equal to £4.25.

• In 1800, the value of gold was standardised by Germany for international trade.

• In “1914 during World War I” the United Kingdom discontinued the gold standard due to high inflation and devaluation of the pound.

• In 1925 Winston Churchill standardised the pound again with gold at £4.86.

• In 1933 , the pound reached its highest valuation when the US devalued the dollar.

• In 1940 during Second World War the pound's value dropped significantly, and then British Government standardise it against Dollar i.e. £ 1 is equal to $4.03.

Characteristics of GBP

British Pound Sterling in international Code (ISO) is written as “GBP”. One pound is equal to “100 Penny”. It is represented by the symbol “£”. It has the following characteristics;

• It is also known by Pound, GBP, Pound Sterling, Quid, Cable, and Nicker.

• It was issued by the “Bank of England” and associate bands are the Bank of Scotland and the Bank of Ireland.

• It is available in denominations; “£1, £5, £10, £20, £50, £100” note and coins available are “1p, 2p, 5p, 10p, 20p, 50p, £1 and £2”.

• It is also the third largest reserve currency in the world.

Current status and usage of GBP

British Sterling Pound is one of the highest trading currencies in the world. As on 17 May 2021, it stands in fifth place among the largest economies of the world after the “US, China, Japan and Germany”.

• It accounts for around 13% of daily trading magnitude in the Forex market.

• The GBP is paired with the US dollar, and Euro, these are known as the “Cable”, as they are the most paired currencies.

• It is also traded with other currencies like Mexican peso (GBP/MXN), South African Rand (GBP/ ZAR), and Norwegian Kroner(GBP/NOK).

• The current value of GBP as on 4 May 2023 ranges between $1.0349-1.2668.

• Apart from the UK and some territories, it is used in England, Wales, Scotland, and Northern Ireland. These territories have their currency but these were linked to GBP.

• It is used in the foreign exchange market for trading purposes, as it is one of the strongest and most stable currencies among others.

Conclusion

“The GBP, also known as the “British Pound Sterling” is the currency of the UK. It is one of the strongest and most stable currencies”. It is used for forex trading in the global market. Apart from Great Britain it is used official currency of a few more countries and territories. It is symbolised as “£”. It is paired with the US dollar and other currencies for trading purposes. It was first released by “The Bank of England” in 1694. The first-pound currency note was released in 1797 by replacing gold coins. Earlier was standardised with gold later after World War II and high inflation it was standardised with the US dollar.

FAQs

Q1. What is Pence?

Ans: The Pence or Penny is the smallest unit of the GBP. It is 1/100 value of GBP. The global stock exchange uses Pence despite the Pound Sterling. The penny was released by the “Bank of England in 1p, 2p, 5p, 10p, 20p, 50p, £1 and £2” denominations.

Q2. What is currency pairing?

Ans: The currency pairing is the ratio of two currencies' value. It is used in the Forex market for simplifying trading. In trading the buyer always buy in one currency and sells in another and vice versa. GBP is paired with various currencies like the US dollar, Euro, Mexican Peso (MXN), African Rand, etc.

Q3. What are the components that alter the Value of the “Sterling Pound”?

Ans: The price or value of the British Pound is influenced by several factors like inflation, trade balance, GDP, retail Sales Data, etc. Countries' elections, employment rates, natural disasters and calamities, and government policies also impact currency exchange rates.