Cable
GBP/USD has a nickname in the FX industry that predates the internet, cars, and most of modern finance: cable. The name comes from the transatlantic telegraph cable that was laid across the ocean floor in 1858, which allowed the first real-time exchange rate quotes between London and New York. When traders in New York wanted to know the London pound price, they sent a message down the cable. The rate that came back was "the cable rate," and the name stuck for 165 years.
Today, cable is one of the three most-traded currency pairs in the world alongside EUR/USD and USD/JPY. Enormous volumes of capital flow through it, and it moves on both sides of the Atlantic — Bank of England decisions, UK economic data, Fed decisions, and US data all matter. But despite the historical weight of the name, the pound has been on a long slide against the dollar for the entire post-war era.
The long decline
After WWII, one pound bought over $4. In the early 1970s, it was about $2.40. By the late 1980s, it had fallen to around $1.10 at one point, before recovering. For most of the 2000s, cable traded between $1.50 and $2.00. Then Brexit happened.
The June 2016 Brexit referendum was one of the biggest currency moves of the modern era. In a single overnight session, cable fell from $1.50 to $1.32 — an 11% drop in hours, which is unprecedented for a major reserve currency. It never fully recovered. Post-Brexit, cable has traded mostly in the $1.20 to $1.40 range, significantly below pre-referendum levels.
What moves cable today
- Bank of England rate decisions. The BoE sets UK interest rates. Higher BoE rates relative to the Fed push cable up; lower rates push it down.
- UK inflation data. The UK has had stubbornly high inflation compared to other G7 economies. Inflation prints move cable heavily because they affect BoE expectations.
- US jobs and inflation data. Half of cable is the dollar side. Strong US data strengthens the dollar and pushes cable down.
- UK political events. Elections, budget announcements, and anything that changes the UK's fiscal trajectory move the pound. The 2022 Truss mini-budget crisis sent cable to all-time lows in a matter of days.
- Risk sentiment. In global risk-off episodes, the dollar tends to strengthen against almost everything, including the pound.
For British travelers to America
When cable is at $1.35 and you are a British tourist in New York, a $100 meal costs you £74. When cable drops to $1.22, the same meal costs £82 — about 11% more, for no reason except the exchange rate. This is why British tourists tend to love America when cable is strong and complain about prices when it is weak. The underlying restaurant price in dollars did not change; only the sterling equivalent did.
The same logic runs the other way: Americans in London find British goods cheap when cable is strong (their dollars buy lots of pounds) and expensive when cable is weak. Brexit made London 15-20% cheaper for American visitors almost overnight, which is one reason US tourism to the UK has boomed post-2016.
Reading the chart
The 5-year cable sparkline shows the post-Brexit range — mostly between $1.20 and $1.40 — with specific shocks visible if they happened in your window. If the rate is near the top of that range, the pound is historically strong. Near the bottom, it is weak. The 2022 Truss-era low around $1.03 (briefly touching near parity) is the most recent dramatic moment most 5-year charts will include.