People send a fair amount of money from the U.S. to the UK and the other way around as remittances regularly. In 2016, U.S. $687 million made its way from the U.S. to the UK in the form of personal transfers, and U.S. $459 million was sent in the opposite direction. Trade figures are a whole different ball game, with just exports from the U.S. to the UK from January to April 2018 accounting for more than U.S. $22.8 billion.
The USD/GBP currency pair is among the most liquid in the forex market. This, along with the availability of various trading instruments, makes the USD/GBP pair a favorite with a number of forex traders. In their parlance, the USD/GBP pair is often referred to as Cable. This comes as a reference to the times when communication between the New York and London markets depended on a communications cable under the Atlantic.
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The U.S. Dollar
The United States dollar has served as the official currency of the country since 1792. It is used as the official currency in the British Virgin Islands, the Caribbean, two British Overseas Territories, the Federated States of Micronesia, El Salvador, Ecuador, and Turks and Caicos Islands. The U.S. dollar is also accepted in various countries alongside other currencies. Some of these countries include Belize, Cambodia, Costa Rica, Haiti, Myanmar, Liberia, and Panama.
More than U.S. $5.1 trillion is estimated to pass through the global forex market each day. In April 2016, the U.S. dollar’s share of the international forex market turnover stood at more than 87%. It has, for some time, maintained its position as the most commonly traded currency in the world. It is also the most widely used reserve currency in the world.
|Nicknames||Buck, moolah, paper, dough, dead presidents, |
bones, greenback, green
|Bank notes||$1, $2, $5, $10, $20, $50, $100|
|Coins||1c, 5c, 10c, 25c, 50c, $1|
The Pound Sterling
The pound sterling, commonly referred to as the British pound, is the official currency of the UK. The pound, as a unit of currency, was used as early as 775 AD, making it the world’s oldest currency that is still in use. The pound sterling is also the official currency of the Isle of Man, Guernsey, Jersey, Tristan da Cunha, the British Antarctic Territory, as well as South Georgia and the South Sandwich Islands.
The pound sterling is the fourth most commonly traded currency in the world, after the U.S. dollar, the euro, and the Japanese yen. In April 2016, it accounted for close to 13% of the international forex market turnover.
The UK was the world’s largest economy for more than a century, during which the pound sterling was used as the world’s primary reserve currency. The country’s decline as the world’s leading economic power began after World Wars I and II, and it then entered a period of stagnation owing to heavy government regulations coupled with rigid labor markets. Now, the pound sterling is fourth on the list of reserve currencies in terms of composition percentage.
|Nicknames||Quid, pound, bread, moolah, nicker, bones, |
dough, readies, folding stuff, paper
|Bank notes||GBP 1, GBP 5, GBP 10, GBP 50, GBP 100|
|Coins||1p, 2p, 5p, 10p, 20p, 50p, GBP 1, GBP 2|
U.S. Dollar / Pound Sterling Historical Rates
The value of the pound sterling fell noticeably during the Great Depression. The GBP/USD pair traded at a high of 2.10 in October 2007 for the first time since April 1981, before dropping to 1.40 toward the end of 2008. The pair then took around five years to get back to the 1.60 level. In June 2014, it finally breached the 1.70 mark again.
Another significant dip in the USD/GBP pair took place in June 2016, upon the UK voting to leave the European Union (EU). The USD/GBP pair witnessed a dip of around 10% in a single trading session, and fell by almost 20% post the Brexit vote. The uncertainty that followed the vote saw a significant number of investors pulling money out of the UK rapidly.
The USD/GBP pair tends to have a positive correlation with the USD/EUR pair, and a negative correlation with the USD/CHF pair. This is because of the positive correlation maintained between the pound sterling, the euro, and the Swiss franc. Before the recession, the USD/GBP pair saw a high correlation with Australian and New Zealand dollars.
USD/GBP in the last five years
|U.S. $1 =|
|1 July, 2013||GBP 0.6575|
|1 July, 2014||GBP 0.5922|
|1 July, 2015||GBP 0.6401|
|1 July, 2016||GBP 0.7560|
|1 July, 2017||GBP 0.7568|
USD/GBP in the last five months
|U.S. $1 =|
|1 Feb, 2018||GBP 0.7010|
|1 March, 2018||GBP 0.7259|
|1 April, 2018||GBP 0.7127|
|1 May, 2018||GBP 0.7346|
|1 June, 2018||GBP 0.7491|
What Affects USD/GBP Rates?
Factors that affect the value of the U.S dollar and the pound sterling have a bearing on the USD/GBP currency pair. For instance, the value of these currencies against each other is affected by the interest rate differential between the American the Federal Reserve and the Bank of England.
The relative strength of both countries’ economies also has an effect on the USD/GBP pair. As a result, the dollar tends to strengthen against the pound when the American economy is stronger than the UK’s, and the reverse holds true as well. The effects of Brexit now seem to be in the past, with the pound sterling recovering near steadily since the mid of April, 2018.
The USD/GBP exchange rate requires your attention if you plan to move money between the U.S. and the UK. Since different overseas money transfer companies tend to offer varied exchange rates, comparing the top players is in your best interest.