The British Pound has experienced a dramatic decline over the past 17 years, from its peak to its trough. After the 2008 financial crisis, the pound fell from a historical high of 2 USD per 1 GBP to 1.08 USD in 2022, a decline of nearly 50%. As the fourth-largest trading currency in the world, accounting for 13% of daily forex market volume, why is the GBP so "fragile"? What is the underlying logic?
GBP's Market Position and Trading Characteristics
The British Pound (symbol: GBP) is the official currency of the United Kingdom, issued by the Bank of England, and represented by the symbol £. Although it ranks fourth globally, its trading volume remains significant. In the forex market, the most active trading pairs are GBP/USD (British Pound against US Dollar) and EUR/GBP (Euro against British Pound).
When quoting GBP/USD, the pound is the base currency, and the US dollar is the quote currency. For example, a quote of 1.2120 indicates 1 GBP = 1.2120 USD. The third decimal place is called