The Currency Of The United Kingdom

Whether the United Kingdom decides to join the European single currency and replace the pound with the euro will have profound economic as well as political effects on the country so is a very important decision and has considerable variations in attitudes towards the topic, although the British public opinion has consistently opposed joining the euro. The euro is currency shared by 18 of the European Union's Member States. The euro was introduced in 1999 and automatically became the new official currency of 11 States, followed by another 7 countries joining to date. However, the UK negotiated an opt-out to from the Treaty meaning they don’t have to adopt the common currency as they fit a certain criteria [1]. Joining the European single currency can have major advantages for the UK, such as diminished uncertainty of exchange rate for businesses and the decreased need to pay transaction costs of changing currencies when abroad. It can also have disadvantages such as loss of domestic monetary policy and variable rate debt in the UK.

The EU has its own currency called the euro which 19 of the 28 European states use. It is run by members of the European parliament, these members set rules that cover a wide range of areas such as rules on transport and business. Once a state becomes a member of the European Union they have a right to withdraw from the Union under the Treaty on the European Union. Article 50 in the Treaty on European Union states, “Any Member State may decide to withdraw from the Union in accordance with its own constitutional requirements." If the United Kingdom votes to leave the Union, they would be the first state to ever withdraw their membership.

The US dollar ($) is the official currency of the United States and its overseas territories. Just like the euro there are other currencies pegged to it, such as the Bermudian Dollar. The US dollar is the fiat currency most used in international transactions and is one of the world’s most dominant reserve currencies.

Now, the increase of dollar against euro has been considerable. In this moment, the change of this currency is at 1,06 dollars. This is great for the United States. So, we see that the dollar has taken force against other currencies.

The Bank of England could purchase pounds by selling dollars in order to shift the demand curve for pounds and the Fed could shift the demand curve by buying the pounds. If the British choose to purchase more of U.S. goods and services, the supply curve for pounds increases, and the equilibrium exchange rate for the pound (in terms of dollars) falls to, say, $3. Under the terms of the Bretton Woods Agreement, Britain and the United States would be required to intervene in the market to bring the exchange rate back to the rate fixed in the agreement, $4. The fixed exchange rate systems offer the advantage of predictable currency values—when they are working. In order for the fixed exchange rates to work, the countries participating in them must maintain domestic economic conditions that will keep equilibrium currency values close to the fixed rates.

A society based on trade was established as early as 4000 B.C.E. (Hunt 6). However, the end of the Cold War marked the beginning of a new stage, an economy fully supported by globalization (Gilpin 10-12). This new beginning for the economy made the international markets the central focus of the economy. Since the gold standard had crushed, the US dollar became the official exchange standard and also the most used currency in the world. Currently, its status of international currency remains the same, but the international market has changed so much that there are factors that leave its future uncertain. The role of the US dollar as an international currency is at risk because of the

Since the inception of the euro in 1999, possible entry of the United Kingdom into the Eurozone has been a highly controversial topic of debate (Hallett, 2002). Compelling arguments have been made both in-favor and against UK entry, focusing not only on the economic aspects, but also on political grounds. This paper will first provide a brief overview of the Eurozone, followed by an examination of three main arguments both for and against UK’s entry into the Eurozone. The goal of this paper is not to answer the question of whether the UK should adopt the euro, but rather, to provide contrasting viewpoints of each argument.

Sterling has been floating since the UK withdraw from membership of the ERM in September 1992. Since that moment, the Bank of England has not intervened to influence the pound’s value, as it became independent from the UK government.

The Euro is the commonly accepted currency for 19 of the 27 members of the European Union. It combines members of the European Union by creating the Eurozone, a negotiated partnership that share economic and political beliefs. The agreements made between these countries were expected to have a positive and

Where the U.S. dollar-euro exchange rate has been in the past several decades from 1999-2014 is as follows. Ever since the euro was created in January of 1999, the value of it has equaled to $1.17. In October of 2000, the dollar was gaining strength when the euro was just $0.88. Afterwards the dollar continued to decline against the euro by 39% from 2001 to 2004 (Islam, 2005). However, in 2005 the dollar rose, but negative outlooks began to occur during the Great Recession in 2006. As the dollar started to decline in 2006 before the subprime mortgage crisis, capital flows caused more volatility in dollar-euro exchange rate market forcing individuals to deal with this economic situation (Harvey,

The UK government has worked hard to build up relationships across the EU. Let’s imagine the case made that, if the eurozone become a club within a club, UK’s natural place is as leader of the "outs" (the 10 states that have not joined the euro).

The common currency is called “euro”. Euro is not used by all members; only 19 countries out of 28 are in the monetary union. A euro as currency was for a first time used in 2002.

The exchange rate between countries determines one currency’s strength in comparison to another. These rates also oversee the economic growth and the currency purchasing power of countries. Therefore, exchange rates are vital in ensuring that one country can maintain its value versus the US dollar which is the most dominant currency. Currently, the Euro/USD exchange rate is at 1.0666. This paper strives to give clear predictions on the value of the Euro against the USD short term and long term.

The United Kingdom continues to be an active member of the European Union though not without significant levels of domestic opposition (UK.GOV, 2015). It makes use of the trade agreements that make up the region and participate in fiscal policy. The difference between the nation and other members of the EU is that it opted out of the Euro; the single currency union. The United Kingdom has retained its pound in trading and policy and looks set to stay on that course. However, it does act with the European Union in handling economic issues that face the continent and the world.

“The United Kingdom continues to be an active member of the European Union though not without significant levels of domestic opposition” (UK.GOV, 2015). It makes use of the trade agreements that make up the region and participate in fiscal policy. The difference between the nation and other members of the EU is that it opted out of the Euro; the single currency union. The United Kingdom has retained its pound in trading and policy and looks set to stay on that course. However, it does act with the European Union in handling economic issues that face the continent and the world.