The British Pound—or ‘pound sterling’—is the oldest currency still in use today, with its history stretching as far back as Anglo-Saxon England in the middle 8th century. Today, it is the fourth-most-traded currency in the foreign exchange market, and it is also the third most held reserve currency in all global reserves. As one of the highest-valued currencies in the world for many years, it is no wonder the British Pound has maintained its high popularity amongst foreign currency traders throughout history.
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British Pound Facts
British Pound futures allow traders to assess value against the U.S. dollar, as well as the opportunity to address risk from currency fluctuations in other foreign trade markets.
Currency rates are determined by a one base currency quoted in relation to a different currency. Major currencies that are traded are floating. Central bank monetary policies can affect the value of currency. The Bank of England regulates monetary policy for the United Kingdom. For instance, low interest rates dictated as policy can be bearish for currency value because new money is being pumped into the market. This is unappealing to foreign investors because returns yield those low interest rates. In contrast, high interest rates set as policy are bullish and appealing to foreign investors because of high interest yields from the returns. Currency values can be also be affected by the nation’s current account balance. An excess or influx in the balance is considered to be bullish, while a deficit or drainage is considered to be bearish. Economic stability and investment in the country also help strengthen currency values because international investors are likely to buy into that country’s favorable markets.
Source: Barchart
Last updated September 2015.
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