Converting pounds to dollars has to be one of the most popular currency conversions in the 21st century. One of those currencies is one of the most valuable in the world, while the other is the de facto currency for international transactions.
If you’re doing anything more serious than mild trading, you’ll eventually have to convert pound to dollar, or vice versa. Also, traveling to Great Britain from the US will see you convert your US dollars to pounds while traveling the other way round will also facilitate the appropriate currency conversion.
Before converting your pounds to dollars, it’s crucial to examine if it’s a good idea at all. This article can be the ultimate guide to converting pounds to dollars without any financial advice. Read on to learn details about converting pounds to dollars and why you’d want to do that.
Is the Pound Worth More Than the Dollar?
Given that both of the currencies are insanely popular, it’s only natural to think the British pound is worth around as much as the US dollar. If you were to choose the better, however, you’ll want to gravitate towards the US dollar, since it’s easily the more popular option.
However, a simple Google search of “pound to dollar” will easily prove you wrong. The British pound is easily worth more than the US dollar, and it has stayed that way for as far back as we remember. That is notwithstanding that the United States has a vastly superior economy to Britain.
Over time, however, you’ll notice that the British pound is generally weakening against the dollar. Around 1900, the pound is worth almost five times as much as the US dollar, thanks to Britain’s influence as the controller of a global empire.
Today, the pound is barely worth more than the dollar, with the current exchange rate placing it at 125% of the value of the dollar. While it’s still a more valuable currency, it’s now comparable to the exchange rate of the dollar, and we expect it to stay that way.
Another interesting fact about pounds and dollars is that the dollar has never been worth less than the pound. While the gap is closing steadily, it will still be quite some time before we see the US catch up, thanks to the reputation of the pound as a generally valuable currency.
Should You Convert Pound to Dollar?
If you’re making the currency conversion to sell later for more money, it’s crucial to ask, should you even go ahead with it? Granted, the pound is more valuable than the dollar, but the preceding section makes it clear that it’s likely declining.
Over the past couple of years, the GBP to USD exchange rate has been pretty stable, peaking at around $1.5 with a low of around $1.14. That makes the past few fiscal years the worst for the British Pound for as far back as anyone can remember.
With that, it’s not a very good idea to purchase the US dollar with British Pounds at this moment. The dollar is costliest at the moment, and there are better chances that the pound will see an increase in value rather than a decrease.
However, the decision of whether to convert the pound to the dollar isn’t entirely black and white; it depends on the context. For purely financial reasons and to hold the currency, you’ll want to keep on to your British pounds.
However, you don’t get much of a choice if you’re traveling to the United States. It doesn’t matter how valuable the pound gets, it’s not legal tender in the United States, making it somewhat necessary to exchange the currencies before traveling to the States, or on arriving there.
On the question of what currency is likely to get stronger, economists tend to favour the US dollar, since it looks more stable than the pound at the moment. With America’s strong economy and the relative calm in the country over the past couple of decades, the currency can only grow stronger.
On the other hand, the pound has been on a downward trend recently, and will likely continue to be, mostly due to the unrest prevalent in Europe. With Russia invading Ukraine, investors are more cautious about dealing with the pound, making the US a more appealing option, thereby increasing the currency’s value.
How to Convert the Pound to Dollar
When you have a specific number of pounds, you may want to convert it to dollars to know exactly how much it’s worth in the US currency. There are several ways to do that, and the advent of the internet has made that easier than it was a couple of years ago.
Here are some of the best ways to convert pounds to dollars.
Using the official exchange rate
The default way to quickly convert between two currencies is to learn the official exchange rate and multiply it against how much of the other currency you have. You can get the official exchange rate for the British pounds by searching Google; although, using your bank’s rates is usually preferred.
Say you’re converting £10 to USD, and the exchange rate is $1.25 for a pound. All you need to do is multiply £10 by 1.25, making the value of your money $12.5. However, doing all these is pretty unnecessary, since there are tools that do it automatically.
Using online converters
There are tools on the internet that convert pounds to dollars on the fly using the latest exchange rates from official sources for free. All you need to do is input how many pounds you need to convert and you’ll see how many dollars it equates to in real-time.
Some online tools allow you to set the exchange rate manually, bypassing the part where you have to make complex multiplications because you need to know how much your money’s worth.
The conversion rate of a pound to the dollar has fluctuated massively over the years, with the British pound winning out every single time. Compared to the early 20th century, the dollar is gaining against the pound, even as the latter stays steadily more valuable than the former.
This article has covered all you need to know about a pound-to-dollar conversion, when you should do it, and how to quickly determine the value of your pounds in dollars.