Sterling Pound (GBP) and the Euro (EUR)
Before the Euro was introduced, Sterling Pounds is one of the most respected currency with its high exchange rate as well as its relative stability in Europe. Sterling Pounds is now the 3rd largest reserve currency in the world, after the US Dollar (USD) and the Euro (Eur).
Since the Euro entered into circulation in 2002, the usage of Sterling Pounds has waned a little. The Sterling Pounds (GBP) further depreciated against the Euro (EUR) during the global financial/ economic crisis in 2008 which made people wonder if UK did the right thing by opting out of the Euro when most other European nations opted in to use the Euro as the common currency.
Currently, 1 Sterling Pound (GBP) trades at 1.16 Euro (EUR).
Tough luck if you work in UK now, since you would had a relative pay cut of 20% compared to the rest of the world a year ago. Note: The pound lost 23 percent against the euro and about 26 percent against the dollar last year as the economy sank into a recession, spurring the central bank to cut the benchmark interest rate to a record low and even print money to buy government debt and other assets this year.
If you study overseas in UK however, your parents can smile at the favourable exchange rate and hope that the Sterling Pounds further depreciates so as to reduce your overall student loan. The irony is you may wish the Sterling Pounds appreciate, so that you have a higher pay (compared to your global peers) if you intend to work in UK when you graduate. The downside of the Sterling Pounds should be limited, with the Bank of England pumping more pounds into the UK financial system and banks to ensure any global financial crisis will not rock the Sterling Pound.
When the Euro eventually takes over the Sterling Pound as the more expensive currency, UK Government may soon realise that it is better to go mainstream.. have a common currency that is more stable and reliable. The usage of a different currency may take some adjustments, but this will lead to better currency control measures should another global crisis looms.
