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GBP/USD exchange rate. The 1976 sterling crisis was a currency crisis in the United Kingdom. Inflation (at close to 25% in 1975, causing high bond yields and borrowing costs), a balance-of-payments deficit, a public-spending deficit, and the 1973 oil crisis were contributors.
At 10:30 am on 16 September, the British government announced an increase in the base interest rate, from an already high 10%, to 12% to tempt speculators to buy pounds. Despite this and a promise later the same day to raise base rates again to 15%, dealers kept selling pounds, convinced that the government would not keep its promise.
The Bank of England took on administration of rate in April 2016. Two years later, in April 2018, the rate underwent a number of reforms. [1] In the same year efforts to promote SONIA as the standard Sterling interest rate benchmark for loans, derivatives and bonds were stepped up. [3] [4]
The London Interbank Offered Rate (LIBOR) came into widespread use in the 1970s as a reference interest rate for transactions in offshore Eurodollar markets. [25] [26] [27] In 1984, it became apparent that an increasing number of banks were trading actively in a variety of relatively new market instruments, notably interest rate swaps, foreign currency options and forward rate agreements.
The British pound sterling, in particular, was poised to dislodge the Spanish dollar's hegemony as the rest of the world transitioned to the gold standard in the last quarter of the 19th century. At that point, the UK was the primary exporter of manufactured goods and services, and over 60% of world trade was invoiced in pounds sterling.
Sterling (ISO code: GBP) is the currency of the United Kingdom and nine of its associated territories. [3] The pound is the main unit of sterling, [4] [c] and the word pound is also used to refer to the British currency generally, [7] often qualified in international contexts as the British pound or the pound sterling. [4]
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Before the First World War, the British pound sterling was the most important international currency, and the City of London was the world's most important financial centre. More than 60 per cent of global trade was financed, invoiced, and settled in sterling, and the largest proportion of official reserves, apart from gold, was held in sterling.