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| FOREX Currency Cross | Currency | Currency | Chart |
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The United Kingdom signed the Maastricht Treaty in Feb 1992, allowing the UK to join the other EU member states on monetary and political union. The British Pound was originally part or the ERM (Exchange Rate Mechanism) which was implemented by countries intending to replace their national currency with the Euro. However, the British Pound was forced out of the ERM on Black Wednesday (16 September 1992) following pressure from currency speculators. George Soros allegedly made over US$1 Billion shorting Sterling during this crisis.
The British people remain staunchly in favour of keeping the Pound despite a preference of the government to replace it.
Since the lows of the Pound against the US Dollar in Jan 1993 (when they were almost at par 1:1), Sterling has steadily appreciated against the dollar ever since until its sudden collapse in 2008.
Sterling is used as a reserve currency around the world and is currently ranked third in amount held as reserves.
UK monetary policy is set "independently" by the Bank of England (BoE) which is based in London, England. Interest rates are set by the Bank's Monetary Policy Committee (MPC) given government specified inflation targets.
In 2007 the Bank was heavily criticised for the handling of the Northern Rock credit fiasco in which savers withdrew billions of Pounds from the stricken bank. Despite the appearance of independence from the UK government, the BoE were seemingly provoked into an abrupt U-turn and bank bail-out. Northern Rock shares have since lost over 90% of their value.