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In the colonial America era, the British parliament enacted laws prohibiting the export of British silver coinage as it was felt the colonies should be providing Britain with precious metals rather than draining them away. The result of this policy was that British silver coins were quite scarce in the North American colonies.
The Americans needed money, so the obvious choice was the Spanish dollar (pieces of eight) which was a much smaller coin, and 4.44 Spanish dollars was worth one pound sterling based on silver content.
As the USD was developed from the Spanish dollar, for most of the 1800s until the start of the First World War, every £1 was worth just under $5. In 1940 the pound was pegged to the dollar at a fixed rate of $4.03. The exchange rate was dropped to $2.80 for nearly a decade from early 1950s to mid 1960s. It was at $2.40 when fixed exchange rates were abandoned in favor of fiat currency whose value was set by currency markets in the 1970s. Obviously the relative value of the pound to the USD has decayed since the 1970s and at present is $1.26
The denominations of the Euro banknotes were set in 1996, and obviously the different national currencies were radically different in value, with the Italian lira being the least valuable. The easiest conversion factor to use for the Euro would be set 1 Euro equal to 1 German Mark (since Germany had the dominant currency in Europe) but that would have been offensive to European sensibilities as it made it too obvious that Europe was adopting the German currency. As a political compromise, the Euro was set at roughly 1/2 of the German Mark which was close to the value of the USD.
So today the British pound is worth 13% more than the Euro, but the history traces back to colonial America.
The denominations of the Euro banknotes were set in 1996, and obviously the different national currencies were radically different in value, with the Italian lira being the least valuable. The easiest conversion factor to use for the Euro would be set 1 Euro equal to 1 German Mark (since Germany had the dominant currency in Europe) but that would have been offensive to European sensibilities as it made it too obvious that Europe was adopting the German currency. As a political compromise, the Euro was set at roughly 1/2 of the German Mark which was close to the value of the USD.
This seems like the most pertinent info.
Look at the exchange rate the day the Euro came in to existence and track currency exchange rates since then. The Euro started out far less than the Pound but has made up a lot of ground.
Why is the British Pound more valuable, expensive than the Euros?
How did this became to be?
You mean the notional value one Pound vs one Euro?
The pound has been around of course for a much longer time, and has evolved as any currency would over time. As mentioned the Euro was introduced much more recently, and initially its value had to be decided on and preset before issuing based on many factors. Since then the markets have affected its exchange value vs the Pound, along with further Euro related policies.
OK people the pound came to being, sort-of anyway, ~1,200 years ago. With the pound being equal in value to one pound of silver. At the time a pound of silver represented a fortune (depending upon whose detective work one believes the all time relative value of silver high was set around 1115-1130 AD.
Cracker Jack's version........
For a long time the pound was backed by silver. And then gold. And then no metal. And then it was depegged (notionally throughout much of the 1900s the pound was pegged to the dollar. Since the early 1990s the pound has been, relatively anyway, free floating.
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IMO people who aren't versed in store of value concepts should understand that - outside of pegged and overly manipulated currencies.......on one hand, markets decide what various denominations are worth. On the other hand central banks and various treasury departments usually attempt to maintain relative values within certain ranges. Further, intentional moves to the stronger or weaker sides are managed in efforts to avoid short term market turmoil.
Why is the British Pound more valuable, expensive than the Euros?
How did this became to be?
Currency value is based on what you can by with it and how much of it's in circulation. While Countries like Germany strengthen the Euro, countries like Greece weaken it. Also there are:
The value of euro's in circulation is 1.2 trillion.
The value of British Pounds in circulation is 70 billion.
I actually surprised the Euro is as valuable as it is. There are 343 million citizens that use the Euro, compared to 66 million in United Kingdom. That's 3,498 Euros per citizen vs 1,060 British pounds per citizen.
Currency value is based on what you can by with it and how much of it's in circulation. While Countries like Germany strengthen the Euro, countries like Greece weaken it. Also there are:
The value of euro's in circulation is 1.2 trillion.
The value of British Pounds in circulation is 70 billion.
I actually surprised the Euro is as valuable as it is. There are 343 million citizens that use the Euro, compared to 66 million in United Kingdom. That's 3,498 Euros per citizen vs 1,060 British pounds per citizen.
Of course currency in circulation is but one part of any sovereign currency. Most currency is in electronic form. Other than for a few small vendors and services around town, I rarely hold cash or do cash transactions.
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