Question

A British pound cost \(2.00 in U.S. dollars in 2008, but \)1.27 in U.S. dollars in 2017. Was the pound weaker or stronger against the dollar? Did the dollar appreciate or depreciate versus the pound?

Short answer

The pound is expected to appreciate or strengthen.

Step-by-step solution

Step 1. Define appreciation and depreciation of currency.

Increased currency conversion rates mean that it takes more dollars to buy a pound. Currency appreciation or strengthening is the term for this.

When the currency exchange rate falls or when trading is done with fewer dollars per pound, the currency depreciates or weakens.

Step 2. Was the pound weakeror stronger against the dollar?

In$1996$, the value of the British pound was $\$1.56$dollars. In $1998$, the British pound was worth$1.66$ dollar. As a result, the pound is expected to appreciate or strengthen since, in $1998$, $1.66-1.56=0.10$ more of a dollar is required to obtain one pound, compared to the dollar required in $1996$.