Name: GBP, British Pound, £, Pound Sterling
Denominations: £5, £10, £20, £50 (rarely used £1, £100) Pound notes. 1p, 2p, 5p, 10p, 20p, 50p, pence coins.
What factors affect it?
The British Pound can be strengthened or weakened by the level of domestic inflation. Inflation levels are measured by the Consumer Price Index which monitors the prices of products within a certain time period. Once the data has been recorded it is then received by the Bank of England and used by the central bank to determine its inflation objectives.
Interest rates play a part in how attractive the Pound is to investors wishing to deposit money in the UK. The higher the interest rate the more appealing the account therefore the greater the demand for Sterling. Likewise, struggling economic growth and the threat of recession can soften the Pound. When in, or close to, recession the UK becomes less able to compete in global markets, which lessens its attractiveness for exports, and interest rates can be introduced to counter the adverse impact of this. Similarly, as 50% of the UK’s exports are bound for the Eurozone, if the currency bloc encounters a problem it can have a big knock-on effect on the UK – and its native currency.