Posted by Allison on 5 June 2017, 17:50
Can you imagine the British pound standing at $2.7857 against the US dollar? Few of us can, especially as the average exchange rate in May 2017 is around $1.2928. But back in 1953, the average exchange rate on the markets was indeed $2.7857. Imagine getting that many dollars for every pound you exchanged!
Those times are long since over, of course, although the pound did see even better rates than that many years ago. In November 1954, for example, you could exchange a pound for $2.8031. By March 1955, this had improved to $2.8062. So, when did the pound start sliding back in the head-to-head against the US dollar?
In truth, while some backsliding happened in the late Fifties, it was minimal. Additionally, we saw the pound standing at around $2.81 throughout the early to middle section of 1959. The same occurred throughout the early Sixties, until around November 1967. In October that year, the pound stood at $2.7831, and by the following month, it had dipped to $2.6347. By December, another big fall had taken place, putting the pound on an average of $2.4065 for that month.
This meant we saw an average of around $2.38 for most of 1968, and the heady highs of $2.78 were long since forgotten. But we were still way off the low rates seen today, so what happened next?
Well, the pound peaked at around $2.61 in the early Seventies, before dropping again. The next major event was in the mid-Seventies. We stalled on $2.0269 in February 1976, before falling to $1.9453 the following month. Over the years, we did eventually pull ourselves back over the two-dollar mark, but the Eighties proved to be a turbulent time. More turbulent than you might think – today’s average is $1.2928 as we mentioned earlier, but in February 1985, the average was much lower, on just $1.0968. It seems hard to imagine this now, but we can see how much currency conversions change over the years when you look at the bigger picture. Looking at the pound versus the American dollar over a 60-year period is an eye-opening experience, as you can see.
We did climb back up again, of course, but we would end up waiting until July 2007 to achieve an average of over two dollars against the American currency. During this month, the average was $2.0337.
So, while we may think the pound is weak now (which is true, to an extent), it is nowhere near as weak as it has been in the past. And it has always bounced back. So perhaps we will see this happen again. The only question is how long we will need to wait before it happens.