The old saying "The sun never sets on the British empire;' indicated an optimism on the part of the British people. It's a pity that former optimism is now missing in the British currency. Since the early 1980s, the British pound has been trading mostly on the downside with some wide swings in its value. This volatility in sterling seems to have been heightened by the 1979 discovery of oil in the North Sea, mostly because currency traders felt Britain's economy was tied to the price of oil. Perhaps during the late 1970s and early 1980s, oil's price may have dictated the value of the British pound. According to Stevenson and Jennings (1984), the strength or weakness of the British economy is reflected in the value of the British pound. Therefore, the pound should be reflecting oil's diminished role in the economy, but it is not.
©1987 by the Board of Student Publications, University of Northern Iowa
"Does the Price of the British Pound Reflect its True Value?,"
Draftings In: Vol. 2:
4, Article 7.
Available at: https://scholarworks.uni.edu/draftings/vol2/iss4/7