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The United Kingdom (UK) has become a powerful economy established by joining the economies of England, Scotland, Wales, and Northern Ireland to form one extremely strong resource. Together, they represent the 5th largest economy in the world when measured by gross domestic product and 9th when measuring its strength by purchasing power parity. The island nations form a tough super economy with leading contributions in the financial sector, the aerospace industry, and the pharmaceutical industry. The UK is also economically strengthened by the oil and gas production in the North Sea.
The central bank of the United Kingdom is the Bank of England (BOE), which regulates the super economy’s currency. The BOE is owned by the UK Government, but was previously under the leadership of private shareholders. The BOE’s website specifies their statutory policy setting responsibilities apply to “interest rates, for financial stability, and for the regulation of banks and insurance companies”.
Further highlighting its independence from the nation’s Government, the BOE can conduct its monetary policy duties within a Government-set framework, however the central bank is considered free from political influence. This denotes a serious separation from direct government oversight while still respecting the government’s regulatory guidelines. This article will cover the financial system of the United Kingdom, as well as a range of market information covering currency, futures, and stocks.show more
The London Stock Exchange (LSE) is a world-leading stock exchange headquartered in London, England. Founded in 1571 as The Royal Exchange, the LSE leads the industry as the world’s oldest stock exchange, and has grown recently with the merger of the Italian stock exchange from Milan, Italy and totals some $4.5 trillion (USD) in market capitalization. Currently, there are 2,600 companies listed on the exchange from a total of 60 countries around the globe. This unusually high amount of diversity offers traders the ability to secure their profile through multiplicity.
The currency of the United Kingdom is the Pound Sterling, British Pound, or the pound, and is represented by the symbol £. As the central bank for the entire conglomerate economy, the BOE is responsible for circulating the nation’s currency and regulating rates. It is worth noting that smaller banks within other nations of the United Kingdom also have the right to print their own notes, but only as long as they retain enough banknotes with the BOE to cover the issues made. The pound is also sometimes referred to as a reserve currency due to its strength and popularity in the marketplace, trailing only the American Dollar (USD) and the euro (EUR).
London is a world capital for trading currency on the foreign exchange market. London possesses a major share of the global market at around some 41% of around $5 trillion (USD) of daily turnover. As the New York session opens for global trade, the highest volume of each day is recorded while the two titans battle out the currency rates until the London market gives way and closes until the next day.
Symbolized by £ or GBP, the pound sterling is commonly named the pound. It is the official currency of UK, its outlying territories, as well as nearby independent nations including the Isle of Man, South Georgia, and many others. The pound sterling is the world’s oldest currency still in use, and until recently, has always been backed by gold. The pound may be further subdivided into 100 pence (or pennies).
The pound is the 4th most traded currency in the foreign exchange market after the US dollar, euro, and the Japanese yen. Importantly, the pound also ranks 3rd most popular currency in global reserves and is currently considered the strongest currency by value in these markets. This bullish trend looks like it is set to continue as the pound sets its sights on previously set high levels.
In terms of internationality, the London Stock Exchange (LSE) ranks first amongst its global peers with over 2,200 companies from over 70 countries in the world listed, including Europe, Asia, China, Latin America, and Africa. Comprising over 100 of the largest companies listed on the LSE, the FTSE100 index (‘footsie’) is the exchange’s most widely known index and is frequently monitored by large institutional investors, brokers, financial experts and the media as a means to measure overall stock market performance. Similar global reference indices include the Dow Jones and S&P 500 (USA), and the Nikkei 225 (Japan).
Despite its large size, the LSE does not give much room for diversity. As the largest financial center of the world alongside New York, the economy of United Kingdom is dominated by its services sector with most importance placed on the financial services industry, making its economy highly vulnerable to changes in consumer credit and commodity prices. Furthermore in 2016, Great Britain introduced a great deal of political risk to the economy of UK when the nation threatened to leave the European Union. The “Brexit” (Britain Exit) has yet to eventuate however the impending withdrawal is forecast to lead to economic vulnerability in the UK over the medium and the long-term.
Known as Europe’s biggest trading venue, the UK stock exchange is a popular choice for international investors looking for investments that carry significantly less risk than emerging or frontier markets. The LSE houses some of the largest blue-chip stocks in the world, including HSBC, BHP, Barclays, BP and Rio Tinto. Many financial analysts project that the LSE will remain one of the most major markets in the world for the foreseeable future.