Why is the British Pound Stronger than the American Dollar even though the US economy is stronger than UK's?
I know it probably sounds like a VERY economically illiterate question to ask. I always assumed that the strength of a currency was contingent on how wealthy a country was etc. So please explain to me why is the Pound more valued than the Dollar even though America is a wealthier country than the UK?
Extra tags:
- why is the pound stronger than the dollar,why pound is stronger than dollar,why is pound stronger than dollar,pound stronger than dollar,is the us dollar stronger than the british pound,is the pound stronger than the dollar,is the dollar stronger than the pound,is the british pound getting stronger,why is the pound strong,why british pound is so strong than US dollar,why dollar is stronger when UK has more gold,why is dollar stronger than british pound,will the gbp be stronger than the usd,will the dollar be stronger than the pound?,will the british pound get stronger,why is pounds stronger than dollars,why is the british pound so strong,why is the sterling pound so strong,why is the british pound strong,whats stronger dollars or pounds
Related posts:
- EURO & BRITISH STERLING POUND – PLS HELP – CURRENCY & RATES?!? I would like to change all my euros into british sterling pounds… I want to change about 10K (all legally worked for) and cant afford...
- What is it in the current British economy that makes the pound so much stronger than the US dollar? Currently the conversion rate is .98 to 1.00 British pound. What is it about the British economy that makes it so strong? What’s the UK’s...
- Why is the British Pound so powerful a currency?? Everybody likes overseas to have dollars, i wonde why? The British pound is a very stable currency, nobody would expect the British Pound to crash....
- Why US Dollar is lighter than British Pound? US being a super power country, why still its currency has less value than a British Pound? 1 British Pound = 1.99200 U.S. Dollars Are...
- What would have to happen to make the US Dollar stronger in relation to the British Pound? Why is the US Dollar now only worth half the value of the British Pound Sterling? I never remember it being this low in comparison....
Tagged with: american dollar • British • british pound • currency • economy • pound • strength • VERY
Filed under: Currencies
Having a stronger currency has its advantages and disadvantages. One advantage is you would be able to buy more of another currency, for example £1 = $1.75. If I was to buy dollars I would be able to afford more dollars with £20 than someone from the US can afford (pounds in this case) with $20. Thus it benefits British people travelling to and purchasing from the US.
However if someone wants to buy products from the UK they will have to spend more as our currency is stronger. This means there will not be as many potential foreign customers as possible, thus decreasing exports from the UK, consequently reducing many firms potential revenue.
If exports are low then this will happen.
Aggregate Demand = Consumption + Investment + Government Spending + (Exports – Imports)
If Exports are low then Aggregate Demand would go down, thus also potentially decreasing investment in the long run.
Hope I helped
I will over-simplify this but i found the best way to explain it is this:
You and I are friends, you have a kilogramme of gold. I have two kilo’s of gold. we each print our own form of currency (the pound and the dollar). you print five pounds. I print twenty dollars. your pounds are each worth 200g of gold. although i am richer each of my dollars is worth 100g of gold.
Thus I am richer but your currency is twice as "strong" as mine.
hope it helps.
Well, that is not the case. The American dollar has been stronger than the British pound for the last five years. Which I think is a farce because the strength of the dollar is purely based on the weakness of the Euro. Remember last September, the U.S. government was on the verge of closing down because they were running out of money to pay its bills? What did the U.S. do? They basically printed more money and issued government bonds. Believe me, the dollar is crudely over-priced. Bear in mind that China owns more dollars than the U.S.!!! That’s a very weak position to be in!!