Pound sterling

The currency of the United Kingdom and British tradition

The British pound sterling is the currency of the United Kingdom. Other currencies called pound, including the Irish pound before the euro, had their own systems. The term pound sterling evokes the pound and the tradition of sterling silver, whose fineness is 925 parts per thousand; the historical origin of the name does not determine the value of the modern currency.

In Italian, the currency has often been called lira sterlina, with ‘lira’ used as the equivalent of the Latin ‘libra’, or pound. The symbol £ shares this origin, recalling the libra as a unit of account.

Before decimalisation in 1971, the British system divided the pound into 20 shillings and each shilling into 12 pence, making 240 pence to the pound. Introduced in the early Middle Ages, the penny was the functional counterpart of the continental denier, illustrating the relationship between medieval British and continental accounting systems.

Origins and development

Silver pennies were struck in the second half of the eighth century during the reign of Offa of Mercia. These issues belong to the context of contacts between Anglo-Saxon England and Carolingian Europe. The pound served as a reference for weight and accounting. Weight standards changed over time and should not automatically be equated with the later troy pound of 373.24 g.

Dividing the pound into 20 shillings, each of 12 pence, gave the penny an accounting value of 1/240 of a pound. The weight and silver content of the coins changed over the centuries. Smaller denominations included the halfpenny and farthing; larger ones included the florin, worth 2 shillings.

The penny and the continental denier were thus similar in function, size and symbolic references. Their abbreviations also drew on Roman and Carolingian terminology: s for the shilling, from solidus, and d for the penny, from denarius.

The first British gold coin with a face value of one pound was the sovereign, issued by Henry VII in 1489. After the union of the English and Scottish crowns under James I in 1603, the sovereign was succeeded by the unite, initially worth 20 shillings. The rising value of gold subsequently brought the unite to 22 shillings and led to the issue of the laurel, again valued at 20 shillings.

In 1663 Charles II authorised the minting of the guinea, a 22-carat gold coin weighing 8.35 grams. Its name referred to the African region from which the metal originated. Another multiple of the penny was the crown, worth 5 shillings and introduced in 1526.

Under George III, Parliament established gold rather than silver as the basis of the monetary system on 22 June 1816, adopting the gold standard. In 1817 the 21-shilling guinea was replaced by a new sovereign: 22.05 mm in diameter, weighing 7.988 g, with a fineness of 22 carats and a fine gold content of 7.32 g. Crowns, shillings and sixpences continued to be struck in silver.

The design of St George slaying the dragon, by the Italian engraver Benedetto Pistrucci, first appeared on the new coinage. The stability of the nineteenth-century pound helped underpin British commercial success. The gold standard was suspended in 1914, restored in 1925 and finally abandoned on 21 September 1931.

The minting of gold coins, commonly known in Italian as sterline d’oro, continued thereafter. The sovereign became a reference coin both for international trade and for numismatic and financial investment.

The British monetary system was decimalised on 15 February 1971. The pound remained the main unit, divided into 100 pence. In 1983 the first base-metal one-pound coin was issued to replace the one-pound banknote, which was gradually withdrawn in the following years.

Related pages

• Carolingian system
• English coins
• Irish coins
• Crown

Predecimal system

Source: Royal Mint Museum: the 1817 sovereign.