The British Pound: The World’s Oldest Currency Still in Use

The British pound2,120−0.05%↗British pound to Iraqi dinar−0.05%2,12030D sterling (GBP) holds a unique place in global monetary history. Most economic historians agree it is the oldest currency in the world still in continuous use today, with roots stretching back more than 1,200 years. For DinarView users who track the dollar-to-dinar exchange rate every day, the story of sterling offers an instructive lesson in how a national currency builds trust, and how it can survive severe crises and still remain one of the world’s most traded currencies, alongside the US dollar, the euro, and the Japanese yen10.06+0.28%↗Japanese yen to Iraqi dinar+0.28%10.0630D.

Historical Origins: From Anglo-Saxon Silver to Imperial Currency

Sterling’s roots go back to the eighth century, when the Anglo-Saxon kingdoms of England minted silver coins called “pounds,” based on the weight of a pound of sterling silver — hence the name “sterling.” Unlike most modern currencies, which were born alongside nation-states in the nineteenth and twentieth centuries, the pound accompanied the evolution of the English and later British state through more than a thousand years of political change: the Norman Conquest, the union of England, Scotland, and Wales, and the Industrial Revolution.

As the British Empire expanded across the eighteenth and nineteenth centuries, the pound evolved from a domestic currency into the world’s premier reserve currency. London was the center of international finance, and sterling was the currency in which global trade was priced, from Indian cotton to Chinese tea and Australian grain. This imperial role made the pound, for decades, the most important currency in the international monetary system, long before the US dollar emerged as its chief rival in the twentieth century.

From Empire to Brexit: A Century of Transformation

The twentieth century brought a gradual decline in sterling’s global standing as the British Empire waned and the United States rose as the leading economic and military power. The two world wars exhausted the British economy and forced the government into heavy borrowing, weakening the pound’s ability to compete with the dollar. At the 1944 Bretton Woods conference, the US dollar was formally established as the world’s principal reserve currency, while sterling retained an important but secondary role.

After the Second World War, Britain entered a long phase of imperial “decolonisation”: India and Pakistan gained independence in 1947, followed by dozens of other colonies in the following decades. With each independence, the “Sterling Area” — the group of countries that pegged their currencies to the pound and held their reserves in sterling — gradually shrank. Even so, the pound remained an important reserve currency held by many central banks around the world for decades afterward.

In more recent decades, Britain’s entry into the European Union in 1973, and its exit (Brexit) in 2020, marked two pivotal turning points. Notably, Britain kept the pound and never adopted the euro while an EU member, unlike most other member states — a reflection of its symbolic and sovereign attachment to its national currency. The 2016-2020 Brexit negotiation period brought sharp swings in sterling’s value: the pound lost roughly 10% of its value against the dollar on the day of the referendum alone in June 2016, before gradually stabilising as the terms of departure and the EU trade agreement became clearer.

Sterling against the dollar: eleven years on the record

History explains why sterling still matters. The daily record explains what it is actually worth. DinarView has taken a reading of the pound every day since August 2016, and the yearly averages below are calculated from that record — dollars per one pound, so a rising line is a stronger pound.

Two things stand out. Sterling’s best year in this window was 2021, averaging $1.38, when the dollar was broadly weak. Its worst was 2022, at $1.24 — the year of the energy shock and the September mini-budget, when the pound briefly traded close to parity with the dollar before the policy was withdrawn. The recovery since has been slow and unbroken: $1.24 in 2023, $1.28 in 2024, $1.32 in 2025 and $1.35 so far in 2026. Over the eleven years the pound is worth about 7 percent more in dollars than it was in 2016. That is a currency that moves — not one in trouble.

Sterling Crises and Its Ability to Recover

No account of sterling’s history is complete without its major crises, which illustrate both the vulnerability of currencies to economic shocks and the ability of stable monetary systems to recover from them.

The first major crisis came in 1949, when the British government was forced to devalue the pound by roughly 30% against the dollar amid postwar pressures and a shortage of foreign reserves. The episode repeated itself in 1967, when Harold Wilson’s Labour government devalued the pound again due to a chronic trade deficit, in a decision famously (if misleadingly) described at the time as one that “will not affect the pound in your pocket,” even though it did in fact reduce the currency’s external purchasing power.

Perhaps the most famous crisis was “Black Wednesday” on 16 September 1992, when Britain was forced out of the European Exchange Rate Mechanism (ERM) after the Bank of England failed to defend the pound’s exchange rate despite sharply raising interest rates within hours and spending billions of pounds in reserves. The crisis, closely associated with investor George Soros, cost the Treasury enormous sums but also freed British monetary policy from the constraints of the European currency peg, paving the way for two decades of relative stability.

During the 2008-2009 global financial crisis, the pound lost roughly a quarter of its value against the dollar and a basket of major currencies, reflecting the British banking sector’s heavy exposure to the crisis. Then came the COVID-19 pandemic in 2020 and the “mini-budget” crisis of September 2022 under Prime Minister Liz Truss, which triggered a sharp, rapid drop in the pound’s value and turmoil in government bond markets, before the controversial fiscal package was withdrawn and conditions relatively stabilised. Across all these crises, sterling has shown a recurring pattern: a sharp shock, intervention by the Bank of England, and a gradual stabilisation that restores confidence in the currency over the medium term.

The GBP-IQD Relationship

For DinarView users, the British pound is not merely a distant historical currency but one with a real presence in Iraq’s economic landscape, albeit to a lesser degree than the US dollar, which remains Iraq’s primary reference currency. The Iraqi dinar’s official exchange rate is pegged to the dollar, with the Central Bank of Iraq setting the official rate at approximately 1,310 dinars per dollar since February 2023, while the parallel market rate typically trades higher than the official rate, reflecting the gap between supply and demand for dollars outside official channels.

The GBP/IQD exchange rate is, in practice, derived from the pound’s exchange rate against the dollar multiplied by the dollar’s exchange rate against the dinar, whether at the official or market rate. This means that any significant move in the global foreign exchange market — such as the pound rising or falling against the dollar due to Bank of England decisions or political developments in the United Kingdom — is automatically reflected in the pound’s value against the dinar, even if nothing has changed inside Iraq itself. This is why anyone converting pounds to dinars or vice versa — whether for family remittances, trade, or travel — needs to track two rates at once: the pound’s rate against the dollar globally, and the dollar’s rate against the dinar locally, which is exactly what DinarView provides through live rates for major currencies compared against Iraqi market prices.

Historically, sterling played a role in an earlier stage of modern Iraqi monetary history. British India’s rupee, and later the Iraqi dinar itself — first issued in 1932 and pegged to the pound sterling during the Mandate period and under the Kingdom of Iraq — were tied to the sterling system before the peg later shifted to the US dollar, especially after the Second World War and the rise of American economic dominance. This historical legacy partly explains why the pound still has a place in Iraq’s monetary memory, even though day-to-day transactions today revolve primarily around the dollar.

There is no direct pound–dinar market in Iraq. The number an office quotes is a cross: it prices the pound against the dollar, then the dollar against the dinar. So a GBP-IQD figure always carries two moves at once, and it is worth separating them.

DinarView yearly averages of the cross and of both its legs. The dinar record begins in May 2022, so that year covers May onwards; 2026 runs to early September.

Between 2022 and 2026 the pound gained about 17 percent against the dinar. Most of that was sterling’s own recovery against the dollar, worth about 13 percent over the same period; the dinar’s slide against the dollar added only about 3 percent. For a family paying tuition in Britain the practical reading is that the pound leg has been doing the work — but the dinar leg is the one that can move suddenly, because it responds to policy in Baghdad rather than to markets in London.

Sterling’s standing in the trading data has slipped in the same period. In the Bank for International Settlements’ 2025 triennial survey — the only global count of foreign exchange turnover — the pound was on one side of 10.2 percent of all trades in April 2025, down from 12.9 percent in 2022 and below the roughly 13 percent it had averaged across the previous three surveys. It is still the fourth most traded currency, but the Chinese renminbi, at 8.5 percent, is now close behind.

Iraqi Students and the Diaspora in the UK

The pound sterling is an everyday currency of life for thousands of Iraqis living in the United Kingdom, whether students at British universities or members of the long-established Iraqi community, particularly in London, Manchester, and other cities home to large Iraqi and Kurdish communities. For an Iraqi student transferring money from Iraq to cover tuition or living expenses, the dinar-to-pound exchange rate directly determines the real purchasing power of the transferred amount, making the timing of a transfer, and tracking sterling’s fluctuations, a financial factor no less important than choosing a university or accommodation.

Remittances from the Iraqi community in Britain to relatives back in Iraq — or the reverse, from Iraq to support students — form a continuous financial flow moving through money-transfer companies, hawala networks, and exchange houses, all of which are affected by fluctuations in the pound’s rate against both the dollar and the dinar. As the younger generation increasingly relies on financial apps and digital platforms to track exchange rates rather than relying solely on traditional money changers, following the live pound sterling rate through platforms like DinarView has become part of the daily financial routine for this group of users, whether to time a transfer well or to compare rates across different service providers.

Frequently Asked Questions

Why is the British pound considered the world’s oldest currency?

Because its name and basic concept as a monetary unit tied to a weight of silver date back to eighth-century Anglo-Saxon England, and it has remained in continuous use through successive political transformations right up to today, unlike other ancient currencies whose names changed or which were abolished and replaced entirely.

Is the pound sterling still an important global reserve currency?

Yes, although its standing is far smaller than at the height of the British Empire. The pound remains one of the few currencies classified among the “major reserve currencies,” alongside the US dollar, the euro, and the Japanese yen, and many central banks around the world still hold it as part of their reserves.

How did Brexit affect the pound’s exchange rate?

Brexit caused sharp swings, most notably a steep drop on the day of the June 2016 referendum, and the uncertainty that persisted until 2020 put intermittent pressure on the pound, before the rate relatively stabilised once the terms of the EU trade agreement became clear.

How can I track the pound sterling’s rate against the Iraqi dinar?

You can track the live rate of the pound sterling against the dollar and the Iraqi dinar, in addition to city rates, gold, and cryptocurrency prices, through the DinarView platform, which continuously updates rates to help users in Iraq and Kurdistan make better-timed financial decisions.

Sources

• Bank of England — statistical database (daily spot exchange rates)
• BIS Triennial Central Bank Survey 2025 — OTC foreign exchange turnover — sterling’s 10.2 percent share
• IMF — Currency Composition of Official Foreign Exchange Reserves (COFER)
• DinarView — live rate board

Rate figures marked DinarView are computed from this site’s own daily record. Everything else links to the publishing institution.

This article is for educational and informational purposes only and does not constitute financial or investment advice.