What You Need to Learn
- Understand what exchange rates are
- Know the difference between a strong and weak currency
- Understand how exchange rate changes affect individuals
- Know how currency strength affects imports, exports, and tourism
- Recognise different world currencies
📚 Knowledge Organiser
What is an Exchange Rate?
The exchange rate is the price of one currency in terms of another. It tells you how much foreign currency you get for your money.
Major World Currencies
| Country/Region | Currency | Symbol |
|---|---|---|
| United Kingdom | Pound Sterling | £ (GBP) |
| USA | US Dollar | $ (USD) |
| Eurozone (EU countries) | Euro | € (EUR) |
| Japan | Yen | ¥ (JPY) |
| China | Yuan/Renminbi | ¥ (CNY) |
| Switzerland | Swiss Franc | CHF |
Strong vs Weak Currency - Use SPICED!
| STRONG Pound | WEAK Pound |
|---|---|
| SPICED = Strong Pound Imports Cheap, Exports Dear | |
|
Imports are CHEAPER • Foreign goods cost less in the UK • Good for UK consumers buying imports • Holidays abroad are cheaper Exports are MORE EXPENSIVE • UK goods cost more for foreign buyers • Bad for UK businesses selling abroad • Fewer tourists visit the UK (expensive) |
Imports are MORE EXPENSIVE • Foreign goods cost more in the UK • Bad for UK consumers • Holidays abroad are more expensive Exports are CHEAPER • UK goods cost less for foreign buyers • Good for UK businesses selling abroad • More tourists visit the UK (cheaper for them!) |
- ✓ More tourists coming to the UK (it's cheaper for them)
- ✓ UK exports become more competitive (cheaper for foreigners)
- ✓ Imports become more expensive for UK buyers
How Exchange Rates Affect You
| Situation | Strong Pound (£ buys more) | Weak Pound (£ buys less) |
|---|---|---|
| Holiday abroad | Good - more spending money | Bad - less spending money |
| Buying imported goods | Good - cheaper prices | Bad - higher prices |
| UK business exporting | Bad - products expensive abroad | Good - products cheaper abroad |
| Foreign tourists visiting UK | Fewer - UK is expensive | More - UK is cheap for them |
Bureau de Change
A bureau de change is a place where you can exchange currencies. Be aware of:
- Exchange rate offered - usually worse than the official rate
- Commission fees - a charge for the service
- Minimum exchange amounts
Quick Check: World Currencies
SPICED: Strong vs Weak Pound
Remember: Strong Pound Imports Cheap, Exports Dear
Card Sort: Strong vs Weak Pound Effects
Sort each effect to the correct category:
True or False: Exchange Rates
Match the Currency to the Country
Fill in the Blanks
Flip Cards: Key Terms
Click each card to reveal the definition:
Case Study: Karen and Wayne's Cruise
📋 Read the case study:
Karen (58) and Wayne (60) have saved for years for their dream holiday - a cruise to the Norwegian fjords. They've booked and paid for the cruise in pounds, but will need Norwegian krone for spending money during excursions and onshore trips.
They're watching the news and see that the pound is strengthening against the Norwegian krone. They're trying to understand what this means for their holiday spending.
Question 1: If the pound STRENGTHENS against the Norwegian krone, what will this mean for Karen and Wayne?
Question 2: If instead the pound WEAKENS against the krone, what happens to their spending power?
Question 3: A weak pound for the UK typically means:
📝 Practice Quiz
Test yourself with these exam-style questions: