Currently the conversion rate between the US and UK is as follows –
$1 USD =0.75 Pound Sterling
If I have money in my US bank and visiting the UK, am I loosing money or gaining it?
I was reading a conversation on the topic on social media and someone commented that it was 2.09 in 2007. I don’t understand the graph. Is that $2.09 or £2.09 and again was that good for US dollar or for the pound?
I would attach the photo, but I can’t apparently. Photo of the graph in the comments
Help
Comments
Graph -> Link
exact number to number currency conversion is worthless to look at.
all that matters is what you can buy with one vs the other and how it changes over time.
If a iPhone costs $1000, but you can get one for £750 you arent gaining or loosing any money.
But if it costs £1000, you are loosing money. But if its only £500 you are gaining money.
Unless it keeps costing $1000, but the £ price keeps going up. Or down.
But the actual $->£ ratio at this moment is irrelevant.
If you convert $10 USD to lb (i cant be bothered finding the symbol) then you have 7.5lb. You can convert that back to $10 USD. If the rate changes say to $1 USD =1Pound Sterling then converting your 7.5lb can be converted into $7.5 USD and now you have less USD than you had before.
According to the graph you linked (not sure if it is correct or not) £1 was equal to $2.09 on 02 November 2007.
As for your question about gaining or losing money, technically you are not losing or gaining any money except for any possible conversion fees and any possible foreign currency charges your financial institution may implement. You are losing purchasing power though.
For an example, if a can of soda costs £1 in the UK the same can of soda would cost $1.34 in the US.
Hope this helps!
edit: left out a word
If you have $1 US and your travel to England where the exchange rate says that you have 0.75 BP, but you didn’t buy anything, then you have not gained or lost any money.
In theory, an item for sale, a loaf of bread for example, would be worth some period of work to obtain, either by making sure bread or by buying the bread. And let’s say that that amount of effort is working $1 US, then that loaf of bread is worth $1 US. If that same amount of effort is worth 0.75 BP then, and the exchange rate matches those numbers, then it won’t make any difference whether you buy the bread using US money or British money, because of are both worth the same amount of effort.
The complications happen because the cost for the loaf of bread isn’t always equal to the same amount of effort. The flour to make the bread may be more expensive in some areas, and the pay scale of workers may vary depending on how many workers there are and how much work is available. These things cause the value for the effort to vary, which makes the price of the bread vary.
So, in effect, converting your money from US dollars to British pounds doesn’t change the value of your money, it simply changes the form that it is in. Ignoring the exchange fees, it’s basically the same thing as converting paper notes into coins, or swapping your apples for oranges because the location people want to trade in coins or oranges instead of paper notes or apples.