Pound sterling

Overview

Sterling (symbol: £; code: GBP) is the currency of the United Kingdom and nine of its dependent territories and formerly of the Kingdom of England. The pound is the base unit of sterling, and the word pound is also used to refer to the British currency generally, often qualified in international contexts as the British pound or pound sterling. Since 1971, each pound has been divided into 100 pence (singular is 'penny'). Sterling is the world's oldest currency in continuous use since its inception. In 2025, it was 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 renminbi, it forms the basket of currencies that calculate the value of IMF special drawing rights. As of early 2026, sterling is also the fourth most-held reserve currency in global reserves. The Bank of England is the central bank for sterling, issuing its own banknotes (as used in England and Wales) and regulating issuance of banknotes by private banks in Scotland, such as the Bank of Scotland and Clydesdale Bank, and in Northern Ireland, such as by Danske Bank. Sterling banknotes issued by other jurisdictions are not regulated by the Bank of England; their governments guarantee convertibility at par. Historically, sterling was also used to varying degrees by the colonies and territories of the British Empire.

Etymology

The basic unit of currency in medieval England was the silver penny or sterling, weighing about 1⁄240 of a tower pound. Two hundred and forty of these coins made a "pound of sterlings". This term (shortened to "pound sterling" in later usage) continued to be used in accounting even after the sterling had ceased to circulate. The earliest known instances of the term occur in Orderic Vitalis's 12th-century Historia Ecclesiastica, which makes mention of librae sterilensium. The origin of the word sterling itself is unclear. It first appears in the 11th and 12th centuries, suggesting that it was coined to describe the new, heavier penny introduced by the Normans. According to the Oxford English Dictionary, the most plausible theory is that it represents Old English *steorling, meaning "coin with a star" (a pair of stars having appeared on certain Norman pennies). The numismatist Philip Grierson rejects this, however, noting that the starred penny was only minted between 1077 and 1080 and formed a tiny fraction of the total coinage issued by the Normans. Grierson suggests instead that the first element is *stēre, meaning "stout" or "strong". In support of this theory, he notes that the Roman solidus had a name with a very similar meaning and was also introduced to replace a lighter coin. An old theory that the sterling was so named because it was introduced to England by Easterlings, i.e. Hanseatic merchants, is untenable on historical and phonological grounds.

Symbol

The currency sign for the pound unit of sterling is £, which (depending on typeface) may be drawn with one or two bars: the Bank of England has exclusively used the single bar variant since 1975. Historically, a simple capital L (in the historic black-letter typeface,

L

{\displaystyle {\mathfrak {L}}}

) placed before the numerals, or an italic l. after them, was used in newspapers, books and letters. The Royal Mint was still using this style of notation as late as 1939. Use of the letter ⟨L⟩ for pound derives from medieval Latin documents: "L" was the abbreviation for libra, the Roman pound (weight), which in time became an English unit of weight defined as the tower pound. A "pound sterling" was literally a tower pound (weight) of sterling silver. In the British pre-decimal (duodecimal) currency system, the term £sd (or Lsd) for pounds, shillings and pence referred to the Roman libra, solidus, and denarius. Notable style guides recommend that the pound sign be used without any abbreviation or qualification to indicate sterling (e.g., £12,000). The ISO 4217 code "GBP" (e.g., GBP 12,000) may also be seen should disambiguation become necessary.

Currency code

The ISO 4217 currency code for sterling is "GBP", formed from the ISO 3166-1 alpha-2 code for the United Kingdom ("GB") and the first letter of "pound". In historical sources and some specialist banking uses, the abbreviation stg (in various styles) has been used to indicate sterling. Many stocks on the London Stock Exchange are quoted in penny sterling, using the unofficial code "GBX".

Cable

The exchange rate of 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 from the mid-19th century, the sterling/dollar exchange rate was transmitted via transatlantic cable.

Slang terms

Historically almost every British coin had a widely recognised nickname, such as "tanner" for the sixpence and "bob" for the shilling. Since decimalisation these have mostly fallen out of use except as parts of proverbs. A common slang term for the pound unit is "quid" (singular and plural, except in the common phrase "quids in"). Its origin is unknown: possible derivations include scudo, the name for a number of currency units used in Italy until the 19th century, introduced by Italian immigrants; or from Latin quid via the common phrase quid pro quo, literally, "what for what", or, figuratively, "An equal exchange or substitution". The term "nicker" (also both singular and plural) may also refer to the pound.

Crown Dependencies and British Overseas Territories

The currency of all the Crown Dependencies (Guernsey, Jersey, Isle of Man) and a third of British Overseas Territories (British Antarctic Territory; Falkland Islands and South Georgia and the South Sandwich Islands; Gibraltar; and Saint Helena, Ascension and Tristan da Cunha) is either sterling or pegged to sterling at par. The other British Overseas Territories have a local currency that is pegged to the U.S. dollar or the New Zealand dollar. The Sovereign Base Areas of Akrotiri and Dhekelia (in Cyprus) use the euro.

Decimal coinage

Since decimalisation on Decimal Day in 1971, the pound has been divided into 100 pence (denoted on coinage, until 1981, as "new pence"). The symbol for the penny is "p"; hence an amount such as 50p (£0.50) properly pronounced "fifty pence" is often pronounced "fifty pee" /fɪfti piː/. The old sign d was not reused for the new penny in order to avoid confusion between the two units. A decimal halfpenny (⁠1/2⁠p, worth 1.2 old pennies) was issued until 1984 but was withdrawn due to inflation.

Pre-decimal

Before decimalisation in 1971, the pound was divided into 20 shillings, and each shilling into 12 pence, making 240 pence to the pound. The symbol for the shilling was "s." – not from the first letter of "shilling", but from the Latin solidus. The symbol for the penny was "d.", from the French denier, from the Latin denarius (the solidus and denarius were Roman coins). A mixed sum of shillings and pence, such as 3 shillings and 6 pence, was written as "3/6" or "3s. 6d." and spoken as "three and six" or "three and sixpence" except for "1/1", "2/1" etc., which were spoken as "one and a penny", "two and a penny", etc. Five shillings, for example, was written as "5s." or, more commonly, "5/–" (five shillings, no pence). Various coin denominations had, and in some cases continue to have, special names, such as florin (2/–), crown (5/–), farthing (1⁄4d), sovereign (£1) and guinea (21s, 21/–, £1–1–0 or £1.05 in decimal notation). By the 1950s, the coins of kings George III, George IV and William IV had disappeared from circulation, but coins (at least the penny) bearing the head of every British monarch from Queen Victoria onwards could be found in circulation. Silver coins were replaced by those in cupro-nickel in 1947, and by the 1960s the silver coins were rarely seen. Silver/cupro-nickel sixpences, shillings (from any period after 1816) and florins (2 shillings) remained legal tender after decimalisation (as 2½p, 5p and 10p respectively) until 1980, 1990 and 1993 respectively, but are now officially demonetised.

History (600–1945)

The pound sterling emerged after the adoption of the Carolingian monetary system in England c. 800. Here is a summary of changes to its value in terms of silver or gold until 1816.

Anglo-Saxon

The pound was a unit of account in Anglo-Saxon England. By the ninth century it was equal to 240 silver pence. The accounting system of dividing one pound into twenty shillings, a shilling into twelve pence, and a penny into four farthings was adopted from the livre carolingienne system introduced by Charlemagne to the Frankish Empire. The penny was abbreviated to "d" – from denarius, the Roman equivalent of the penny; the shilling to "s" – from solidus (written with a long s, ſ, later evolving into a simple slash, /), another Roman coin; and the pound to "L" (subsequently £) – from Libra, the Roman pound weight. The origins of sterling lie in the reign of King Offa of Mercia (757–796), who introduced a "sterling" coin made by physically dividing a Tower pound (5,400 grains, 349.9 grams) of silver into 240 parts. In practice, the weights of the coins were not consistent, 240 of them seldom added up to a full pound; there were no shilling or pound coins and these units were used only as an accounting convenience. Halfpennies and farthings worth 1⁄2 and 1⁄4 penny respectively were also minted, but small change was more commonly produced by cutting up a whole penny.

Medieval, 1158

The early pennies were struck from fine silver (as pure as was available). In 1158, a new coinage was introduced by King Henry II (known as the Tealby penny), with a Tower Pound (5,400 grains, 349.9 g) of 92.5% silver minted into 240 pennies, each penny containing 20.82 grains (1.349 g) of fine silver. Called sterling silver, the alloy is harder than the 99.9% fine silver that was traditionally used, and sterling silver coins did not wear down as rapidly as fine silver ones. The introduction of the larger French gros tournois coins in 1266, and their subsequent popularity, led to additional denominations in the form of groats worth four pence and half groats worth two pence. A gold penny weighing twice the silver penny and valued at 20 silver pence was also issued in 1257 but was not successful. The English penny remained nearly unchanged from 800 and was a prominent exception in the progressive debasements of coinage which occurred in the rest of Europe. The Tower Pound, originally divided into 240 pence, devalued to 243 pence by 1279.