A short history of the British pound

An English ten Pound note is seen in an illustration taken March 16, 2016. REUTERS/Phil Noble

The pound has had a chequered past Image: REUTERS/Phil Noble

Chris Parker
Head of Digital Media, World Economic Forum
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After the historic United Kingdom vote to leave the European Union, the pound suffered one of its worst days ever - falling to a 30-year low. More than $2.5 trillion was wiped from global equity values in the days that followed the result.

The British currency is not new to turmoil, having had a bumpy ride over its 1,200 year existence.

The timeline below charts the major events that defined a currency which is still the fourth most traded in the world.

Ancient Rome
The British pound has its origins in continental Europe under the Roman era. Its name derives from the Latin word "poundus" meaning "weight".

The £ symbol comes from an ornate L in Libra.

Anglo-Saxon era
The pound was a unit of currency as early as 775AD in Anglo-Saxon England, equivalent to 1 pound weight of silver. This was a vast fortune in the 8th century.

Athelstan, the first King of England adopted sterling as the first national currency. He set up mints around the country to supply the growing nation.

One pound could buy you 15 cows.

Image: Flickr/Simon Huggins

England's naval defeat by France in the 1690 Battle of Beachy Head led to King William III establishing the Bank of England to fund his continued war with France.

£1.2m was raised in 12 days; half of this was used to rebuild the navy.

The United Kingdom defined sterling's value in terms of gold rather than silver for the first time.

Sir Isaac Newton, as Master of the Mint, set the gold price of £4.25 per fine ounce that lasted two hundred years, except during the Napoleonic wars when gold cash payments were suspended.

The official gold standard came in when Germany adopted it, encouraging mass international trade for the first time.

The idea was that a nation must back its money in circulation with the equivalent in gold reserves.

The United Kingdom suspended the gold standard in 1914 so it could support its war efforts.

The country borrowed heavily and suffered high inflation during World War I. It was forced to devalue the pound considerably towards the end of the war.

£1 equivalent to $4.70.

Winston Churchill returned sterling to the gold standard in 1925 at the pre-war rate of £4.86 to the dollar.

£1 equivalent to $4.86.

Sterling came off the gold standard and the pound promptly dropped considerably.

£1 equivalent to $3.69.

The United States devalued the dollar in 1933, and the pound rose to its highest ever value.

£1 equivalent to $5.

A significant drop in the value of the pound with the outbreak of WWII led the British government to peg the value of the pound to the dollar.

£1 equivalent to $4.03.

 Spitfire and Hurricane aircraft from WWII fly in formation during a
Image: REUTERS/Peter Nicholls


“It does not mean that the pound here in Britain, in your pocket or purse or in your bank, has been devalued."

Prime Minister Harold Wilson

Another crisis in the British economy and the government announced a devaluing of the pound by over 14%.

£1 equivalent to $2.40.

High unemployment and inflation forces Britain to request an IMF loan.

£1 equivalent to $1.7.

Turning point for the pound. Exchange controls were lifted, and for the first time it was allowed to float.

£1 equivalent to $2.

International intervention in the currency markets to depreciate the dollar drives down the value of the pound.

£1 equivalent to less than $1.2.

The UK exits the Exchange Rate Mechanism seeing a sharp decline in the value of the pound by over 20%.

£1 equivalent to $1.5.

After recovering in the 90s the dot-com bubble burst sees the pound fall again by 20%.

£1 equivalent to $1.4.

Lehman Brothers demise triggers the global financial crisis and the pound falls 30%.

£1 equivalent to $1.4.

 Staff stand in a meeting room at Lehman Brothers offices in the financial district of Canary Wharf in London
Image: REUTERS/Kevin Coombs

UK votes to leave the EU. The pound suffers one of its worst days ever - falling to a 30-year low.

£1 equivalent to $1.33.

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