How to Convert the British Pound to Dollars

Lazuzach

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posted on 13 years ago — updated on 1 second ago

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The official monetary currency for the United Kingdom is the British pound. The pound is also called the pound sterling. But there are a lot of currencies in the world, and you don't have to live in England to use the pound. Traveling requires you to exchange currencies, and it is not so easy as remembering that 10 pounds = 10 dollars. Currency rates change every day, even every hour, but they are still not difficult to calculate.

Steps

Understanding and Converting Exchange Rates

Look up the current currency exchange rate, which changes by the hour. The value of a currency depends on the stock exchange rate at any given time. Real-time quotes can be found on the NASDAQ, NYSE and AMEX stock exchanges or other financial websites, but the easiest way to see this is by simply Googling "Convert dollars to pounds." No matter where you find it, look up the current "dollars to pounds" exchange rate. It should look something like this: 1 GBP = 1.1200 USD (10/20/22, 2:00 PM EDT rate) GBP Stands for Great British Pound. The symbol is "£." USD Stands for United States Dollar. The symbol is "$."

Multiply the amount in pounds by the conversion rate to convert it to dollars. This is all you have to do to convert currencies. Think of it this way -- if 1 G B P = 1.4 U S D {\displaystyle 1GBP=1.4USD} 1GBP=1.4USD, then 2 G B P = 2.8 U S D {\displaystyle 2GBP=2.8USD} 2GBP=2.8USD, or 1.4 ∗ 2. {\displaystyle 1.4*2.} 1.4*2. So, for every pound, you end up with an extra 1.4 USD. So just multiply the amount in pounds by the conversion rate to get your number of dollars. Say you want to buy a £35 sweater in London's Heathrow Airport. In dollars, you'd be spending: Conversion rate: 1 GBP = 1.4635 USD £35 = ______ USD. 35 * 1.4635 £35 = $51.22

Use an online currency calculator to convert currency perfectly at any hour. Remember that currency rates can change by the minute, meaning your hand conversion may not be useful shortly after you find it. This is why the quickest and easiest method to use in converting currency is one of the free online converters. Many phones offer apps as well that are capable of keeping up with changing rates. Open your web browser. Clear the address line and type "currency converter." Several websites for currency conversion will appear. Enter or click on British pound in the "from" column and enter or click on USD or dollar in the "to" field. Enter the amount of currency you want to convert from pounds to dollars. Click "convert" to get a perfect representation.

Make sure the online calculator or converter is current with up-to-date exchange rates. There should be a date on the website to indicate the last update. If this is not within 24 hours of your current date, then don't use the site unless you only need rough estimates. That said, sites like the NYSE will have to-the-minute rates, and should be trusted before any 3rd party sites.

Convert back to pounds by simply dividing the exchange rate instead of multiplying it. If you want to change pounds back to dollars, simply divide by the exchange rate. Make sure, however, that you're using the GBP → USD conversion rate, and not the USD → GBP rate. The former number tells you how many dollars one pound is worth, the later tells you how many pounds one dollar is worth. Think of it as dollars per pound vs. pounds per dollar -- they are based on the same information, but they are different numbers! If you have dollars and want to convert to pounds, you can multiply the dollars by the USD → GBP conversion rate, OR divide it by the GBP → USD conversion rate.

Know that currency rates fluctuate based on global demand for that currency. Currency prices are always in flux. This is because currency, like anything else, is a tradable good. Image a firm in London wants to sell to the US stores. In order to buy their goods, the US store must purchase the goods with pounds, then sell them for US dollar. This means that pounds are flowing out of England and being converted to other money, making the pounds left in England a more valuable good that the US has demand for. There are fewer pounds now, so the value of each pound goes up. Meanwhile, the US market, which spent pounds to get dollars, sees the USD decrease in value, since more of the wealth is in Dollars, giving them less demand. A high demand for a currency usually means that currency increases value. Other things that affect currency include: Concerns about the safety/health of the country's market (which is why a war-torn country has a low-value currency). Amount of business interest or growth in a market. Tourism.

Estimating Currency Conversions

Look up the current exchange rate to as many decimals as you can. The more decimals in your rate, the more precise your conversion will be. However, if you just need to make an estimation, you can use much simpler rates, like 1 GBP = 1.45 USD, to get a good idea of the conversion.

Multiply the amount in pounds by the whole number in the conversion rate. For now, ignore the number after the decimal, and instead multiply the pounds by the whole number. So, if you're buying a £20 hat, and the exchange rate is 1.456042, start by multiplying 20 * 1. This is almost always 1 or 0 since the USD and GBP don't often vary by that much. Problem: Estimate Conversion of £20 into USD using an exchange rate of 1.456042 Step 1: Multiply whole number of conversion rate by price in GBP. £20 * 1 = £20.

Use rounding to quickly estimate the exchange rate while shopping. If you see a hat for £20 and want to know what it will cost you in dollars, you'll likely struggle to multiply 20 by 1.456042. But it will be much easier to multiply by 20 by 1.5, even if you know the final estimate will be a little higher than the actual answer. Note that the smaller your rounding, the more precise the answer will be. Problem: Estimate Conversion of £20 into USD using an exchange rate of 1.456042 Step 1: Multiply whole number of conversion rate by price in GBP. £20 * 1 = £20. Step 2: Round conversion rate to manageable number. 1.456042 → 1.5.

Find 10% of the price in pounds to get a simple, easily added percentage. This is really easy to do, though it seems complex. First, note that 10% + 10% + 10% + 10% + 10% = 50%. Second, remember that .1 is the same thing as 10%, meaning .5 is the same thing as 50%. So, if you need to find a tricky conversion decimal, simply find 10% and add it together until you reach the right percentage. And 10% is easy to find -- simply move the decimal one place to the left! Problem: Estimate Conversion of £20 into USD using an exchange rate of 1.456042 Step 1: Multiply whole number of conversion rate by price in GBP. £20 * 1 = £20. Step 2: Round conversion rate to manageable number. 1.456042 → 1.5. Step 3: Find 10% of the price in pounds and add it until it matches your decimal. £20 * 10% = £2 £2 * 5 = £10

Add the amount found in the decimal to the amount found in the whole number to finish your estimate. Since the whole number is usually 1, this means you simply find 10%, add as many as needed to match the decimal in the conversion rate, and add this to the amount in pounds. So, to finish the example problem: Problem: Estimate Conversion of £20 into USD using an exchange rate of 1.456042 Step 1: Multiply whole number of conversion rate by price in GBP. £20 * 1 = £20. Step 2: Round conversion rate to manageable number. 1.456042 → 1.5. Step 3: Find 10% of the price in pounds and add it until it matches your decimal. £20 * 10% = £2 £2 * 5 = £10 Step 4: Add together your whole number and your decimal conversions: Whole: £20 Decimal: £10 Estimated Amount: £30 The actual conversion (using this rate) would be $29.12, meaning this was a useful estimation.