Is It Better to Get Paid in Pounds or Dollars in 2020?

The British pound and the U.S. dollar have a historic rivalry. Let's go back to the 1900s when Britain was one of the most powerful countries in the world. Back then, Britain's economy was very strong. During the early 1900s, the British pound was worth five times more than the U.S. dollar. When you consider how powerful each country was back in the day, this shouldn't come as a surprise.

However, due to World War I, World War II, and the break up of the British Empire, the value of the pound depreciated. Also, after World War II, the U.S. economy became one of the strongest ones in the world.

This is why, today, the two currencies are more equally poised. So, the question has to be asked - is it better to be paid in pounds or dollars in 2020?

Let's find the answer together.

Before we answer the main question of this article, we must first answer this one. So, what is the relative strength of a currency? Well, first of all, every currency has a nominal value. The nominal value, however, is somewhat arbitrary and it is determined by the government of the country. The thing that really matters is how the value of a certain currency changes in relation to other currencies.

For example, during the last 20 years, one British pound was worth more than one U.S. dollar. Regardless of their smaller economy, the British pound had more value than the U.S. dollar. This is an example of relative strength.

However, due to many political and economical issues, mostly caused by Brexit, the value of a pound depreciated. The relative value and exchange rate also changed drastically. If you are interested in tracking exchange rates, visit here for more detailed information. Now, to give you a reference point regarding the depreciation of the British pound. On July 31, 2020, one pound was worth 1.32 dollars. For example, just two years ago, in March 2018, the pound was worth 1.40 dollars. If we go back to May 2014, you can see that the pound was worth 1.68 dollars.

Therefore, it's safe to say that political and other social issues can definitely influence the relative strength of a certain currency.

One of the things you should also consider is that there are many more U.S. dollars in circulation than British pounds. According to the latest research, in July this year, there were 1.93 trillion U.S. dollars in circulation. On the other hand, there were only 70.16 billion pounds in circulation. In other words, the rate of inflation also influences the strength of a currency.

The economic experts warned the British government that Brexit will have a negative influence on the country's economy, but the people voted for Brexit nonetheless. Leaving the European Union had an immediate effect on the British economy. The value of the pound depreciated over 8% in the 24 hours after the vote.

Ever since then, the relative value of the British pound has been declining. This is why many investors have been avoiding this currency to this day. This resulted in a new low point for the pound. This March the British pound was worth 1.16 dollars. However, as we mentioned, the situation with the pound has stabilized and as of July 31, the pound is worth 1.32 dollars.

Finding the answer to this question is not a simple task. As you can see, there are a lot of different factors in play. Some are economical and some are political. Also, both Britain and the United States are currently facing the economic crisis caused by the coronavirus pandemic. However, despite all of these perils, the British pound is still more valuable than the U.S. dollar. So, if this is the only factor you are considering, it's better to be paid in pounds.

Still, it has to be said that the U.S. economy is more stable than the British economy. At least at the moment. Therefore, if you are an investor or a business owner, there are a lot of pros to opting for the U.S. dollar right now.

To summarize, if you are a small contractor, it's definitely better for you to get paid in pounds. If you are a business owner, you should know that the dollar is a bit more stable than the pound these days. In either case, you should do thorough research before you make a decision. Things change and the most responsible thing you can do in this situation is to inform yourself.