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Pound Sterling to Emirati Dirham Exchange Rate

The British Pound (GBP) to Emirati Dirham – also called the UAE Dirham – (AED) exchange rate currently trades at around 1 GBP to 4 AED. Below is some information about each currency and the history of the GBP / AED exchange rate.

British Pound Sterling (GBP)

The UK Pound, aka Pound Sterling, is the official currency of the UK, as well as various small ex-colonial territories around the globe. One Pound is subdivided into 100 pence. Its currency code is GBP and its currency symbol is £.

As the world's oldest continuously exchanged currency, the Pound is its fourth most traded, with only the exchange of US Dollars (USD), Euros (EUR) and Japanese Yen (JPY) coming ahead of it in volume. Sterling is issued by the Bank of England (BoE), which also sets interest rates for the UK economy.

The term Pound Sterling was initially derived from the Old English term for small star, which was present on the coins at the time. Forex traders in currency markets often use the term 'Cable' to denote the Pound to Dollar (GBP / USD) exchange rate.

Interesting to know: the British Pound is colloquially known by many handles, including a 'quid' (£1), a 'pony' (£25), a 'monkey' (£500) and a 'grand' (£1,000).

The Emirati Dirham (AED)

The Emirati Dirham (AED) is the official currency of the United Arab Emirates (UAE) having been introduced in 1973 as a replacement for the Qatar and Dubai Riyal and the Gulf Rupee. The Dirham is notionally pegged to the IMF’s Special Drawing Rights (SDR) global reserve monetary system, although in practice it is pegged to the US Dollar (USD) at a rate of 1 USD to 3.67 AED. One AED is subdivided into a hundred fils, and the currency symbol of the Dirham is د.إ.

While the Dirham is not considered to be one of the world’s major currencies, it is nevertheless a popular one, with the Indian Rupee (INR) being its primary exchange partner. Oil, which is the main commodity sold by the UAE, is mostly traded in USD. With many people opting to travel to Dubai on vacation, the Dirham is a popular holiday currency.

Interesting fact: A falcon is depicted on all Dirham notes to prevent forgery.

Pound Sterling to Emirati Dirham (GBP / AED) Exchange Rate

The Pound Emirati Dirham exchange rate (GBP / AED) can be seen to have been on a continuous downward descent if one looks at currency charts dating back to the early 1970s. When AED was first introduced £1 would buy around 12 د.إ, whereas today it will only afford around 4.5 د.إ.

In 2020 so far, the GBP / AED exchange rate is proving relatively stable and has ranged from 4.6 د.إ to 4.8 د.إ.

Factors that Drive the British Pound to Emirati Dirham (GBP / AED) Exchange Rate

The British Pound (GBP) is influenced primarily by interest rates set by the Bank of England and UK political developments and economic policies, especially relations with the European Union over Brexit. With most of the UK economy relying on consumer spending and financial services (stocks, bonds & insurance products traded in the City of London), the valuation of the Pound can be sensitive to any factor which affects these.

Immediately after the Brexit referendum in the UK there was a widespread slump in the value of the Pound on world markets. This was clearly observed in the GBP/AED exchange rate which plummeted from around 5.2 د.إ to 4.6 د.إ at the time, although it has since rebounded slightly.

As for the Emirati Dirham, the price of oil is a major contributor to the notional value of the currency, although its US Dollar peg prevents it from being directly affected. Instead, it is the value of USD which drives the GBP / AED exchange rate for the most part, with the Dollar’s recent strength contributing to a diminishing GBP rate when buying AED.

Outlook for GBP / AED

The British Pound Emirati Dirham (GBP / AED) exchange rate today is being driven by global risk factors, which in turn drive the price of oil and the value of the ‘safe-haven’ US Dollar.

In Mar 2020 the Bank of England opted to cut interest rates in order to stimulate the economy in the face of fears relating to the coronavirus pandemic. The Central Bank of the UAE has been steadily cutting interest rates since 2018 and analysts predict this trend will continue in line with other central banks.

Looking ahead, the Pound to Emirati Dirham exchange rate is likely to continue to be driven by the economic fallout from the coronavirus health scare, especially the price of oil, with AED likely coming under further pressure if the situation is not brought under control.

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