Currency has been a medium of exchange from the existence of humanity and the Central bank was created for the sole initiative of ensuring reasonable currency exchange in different jurisdiction. Therefore, the thesis of this paper will be to look into the historical price movement and any central bank policy that has been put onto the British pound.
Price movement of sterling pound
First and foremost, it is worth noting that the British Sterling pound, is the fourth most traded form of currency after the US dollar, Euros and the Japanese yen. The price movement of the sterling pound is adversely affected by external factors just like the issue of Brexit that saw the United Kingdom leave the European Union. Research indicates that, investment in any jurisdiction is one of the factors that acts as a lee-way of allowing for the trading of the currency, however; due to the Brexit, the sterling pound has fallen in comparison with the Euros and the US Dollars.
It is therefore, worth noting that, as of 2017, 1 sterling bound is equivalent to 1.23 dollars and this clearly indicates the strength that the Sterling pound has in forex bureaus. The drastic shift on the currency clearly indicates that the market value of the currency has been affected when a comparison is made on the two currency values.
In looking into the historical price movement of the sterling pound, the highest value recorded is 2.86 in 1957. On the other hand, the lowest price movement recorded is 1.05 that occurred in the February of 1985. However, despite the fluctuation, the British sterling pound, it has still retained its stability in the commercial market. The British sterling pound has reduced from 1.17 to 1.2268 of 2017.
The price movement is one of the factors that sways business every day in that, the more stable the currency, the higher it’s probability of being used as a source of currency. The British pound has traditionally maintained a stronger capital value as compared to the US Dollar.
The central bank policy on the exchange rate of the United Kingdom has been effective in regulation of the interest rates with regards to the exchange policies. In addition, this is highly attributed to the fact that the British sterling pound has overtime has been stagnant in the forex bureaus.
In addition, during the Brexit movement, the Central bank policy was put in place to regulate the currency in effort to prevent it from falling in its value of the British pound. The falling of the value of the currency was highly attributed to the reduction of the investors in the market.
Conclusion
In conclusion, it is quite evident that the value of the British sterling pound is affected by various factors. However, it has still retained its adverse strength in the foreign exchange market.
Work cited
Allen, Larry. Encyclopedia of money. Santa barbara , California: ABC-CLIO, 1999.
Bearce, David. "Fixed exchange rate commitments, central bank independence and external currency stability." Internation studies Quarterly (2008): 807-824.
