Pound Sterling

The pound sterling (symbol: £; ISO code: GBP), commonly known as the pound and less commonly referred to as sterling, is the official currency of the United Kingdom, Jersey, Guernsey, the Isle of Man, South Georgia and the South Sandwich Islands, the British Antarctic Territory, and Tristan da Cunha. It is subdivided into 100 pence (singular: penny, abbreviated: p). A number of nations that do not use sterling also have currencies called the pound. Sterling is the fourth most-traded currency in the foreign exchange market, after the United States dollar, the euro, and the Japanese yen. Together with those three currencies and the Chinese yuan, it forms the basket of currencies which calculate the value of IMF special drawing rights. Sterling is also the third most-held reserve currency in global reserves (about 4 per cent). The British Crown dependencies of Guernsey, Jersey and the Isle of Man produce their own local issues of sterling (the Guernsey pound, the Jersey pound and the Manx pound) which are considered fully equivalent to UK sterling in their respective regions. The pound sterling is also used in Gibraltar (alongside the Gibraltar pound), the Falkland Islands (alongside the Falkland Islands pound), Saint Helena and Ascension Island in Saint Helena, Ascension and Tristan da Cunha (alongside the Saint Helena pound). The Bank of England is the central bank for the pound sterling, issuing its own banknotes, and regulating issuance of banknotes by private banks in Scotland and Northern Ireland. Banknotes issued by other jurisdictions are not regulated by the Bank of England; local governments use Bank of England notes as backing for local issuance by allowing them to be exchanged 1:1 at face value. The full official name pound sterling (plural: pounds sterling), is used mainly in formal contexts and also when it is necessary to distinguish the United Kingdom currency from other currencies with the same name. Otherwise the term pound is normally used. The currency name is sometimes abbreviated to just sterling, particularly in the wholesale financial markets, but not when referring to specific amounts; for example, 'Payment is accepted in sterling' but never 'These cost five sterling'. The abbreviations 'ster.' and 'stg.' are sometimes used. The term 'British pound' is sometimes used in less formal contexts, but it is not an official name of the currency. The exchange rate of the pound sterling against the US dollar is referred to as 'cable' in the wholesale foreign exchange markets. The origins of this term are attributed to the fact that in the 1800s, the GBP/USD exchange rate was transmitted via transatlantic cable. Forex traders of GBP/USD are sometimes referred to as 'cable dealers'. GBP/USD is now the only currency pair with its own name in the foreign exchange markets, since IEP/USD, known as 'wire', particularly in the forward FX markets, no longer exists after the Irish Pound was replaced by the euro in 1999. There is apparent convergence of opinion regarding the origin of the term 'pound sterling', toward its derivation from the name of a small Norman silver coin, and away from its association with Easterlings (Germanic traders) or other etymologies. Hence, the Oxford English Dictionary (and sources derived therefrom) state that the 'most plausible' etymology is derivation from the Old English steorra for 'star' with the added diminutive suffix '-ling', to mean 'little star' and to refer to a silver penny of the English Normans. As another established source notes, the compound expression was then derived: However, the perceived narrow window of the issuance of this coin, and the fact that coin designs changed frequently in the period in question, led Philip Grierson to reject this in favour of a more complex theory. Another argument that the Hanseatic League was the origin for both the origin of its definition and manufacture, and in its name is that the German name for the Baltic is 'Ost See', or 'East Sea', and from this the Baltic merchants were called 'Osterlings', or 'Easterlings'. In 1260, Henry III granted them a charter of protection and land for their Kontor, the Steelyard of London, which by the 1340s was also called 'Easterlings Hall', or Esterlingeshalle. Because the League's money was not frequently debased like that of England, English traders stipulated to be paid in pounds of the 'Easterlings', which was contracted to ''sterling'.