USD to British Pound Calculator

Whether you're shopping on a US website, planning a trip to America, or being paid in dollars, you'll want to know how many pounds you'll actually get. The answer depends not just on the exchange rate, but on who's doing the converting and what they charge.

This guide explains how the dollar to pound rate works and how to get a fair deal. To convert an amount, use the US dollar to pound calculator, which fills in today's reference rate.

How exchange rates work

An exchange rate is the price of one currency in terms of another. The pound to dollar rate is one of the most traded in the world, and it's often called "cable" in financial markets, after the transatlantic telegraph cable once used to send prices.

Rates change constantly during the trading day, influenced by interest rates, inflation, economic news and market sentiment on both sides of the Atlantic.

Quoting the rate both ways

The same rate can be quoted in two directions:

• £ per US$1, for example 0.75, meaning one dollar is worth 75p.
• US$ per £1, for example 1.33, meaning one pound buys $1.33.

One is simply 1 divided by the other. The calculator shows both.

The mid-market rate

The mid-market rate is the midpoint between the prices at which banks buy and sell a currency on the wholesale market. It's the fairest benchmark, and it's what you'll see on news sites and in our calculator.

Our calculator uses a reference rate published each working day by the European Central Bank, which is a widely used mid-market benchmark. It's updated once a day, so the live rate during the day may be slightly different.

Why you get fewer pounds than the headline rate

When you convert money, the cost usually comes in one or both of these forms:

• An exchange rate margin, where the provider gives you a rate worse than mid-market and keeps the difference. This is often hidden.
• A fee, such as a fixed charge or a percentage. Many UK debit and credit cards charge a non-sterling transaction fee, often around 3%, when you spend in dollars.

For example, converting $100 at a mid-market rate of 0.7538 gives £75.38. If your card adds a 3% fee, you'd effectively receive about £73.12. The calculator lets you add a fee to see the real amount.

Ways to get a better rate

1. Compare the total cost, not just the advertised rate or "0% commission".
2. Use a card with no foreign transaction fees for spending abroad or online in dollars. Several UK banks and specialist cards offer this.
3. Avoid airport bureaux, which often have the worst rates.
4. Order travel money in advance online if you need cash, and compare providers.
5. Use specialist transfer services for larger international payments, which often have smaller margins than high street banks.

Always pay in the local currency

When you pay by card in the US, or on a US website, you may be asked whether you want to pay in dollars or pounds. This is called dynamic currency conversion.

It can seem convenient to see the price in pounds, but the merchant's provider sets the exchange rate, and it's often poor. In most cases you'll get a better deal by choosing to pay in dollars and letting your own card provider convert it. The same applies at cash machines abroad.

Receiving dollars

If you're paid in dollars, for example as a freelancer, check how your bank converts incoming payments and what it charges. Specialist accounts that let you hold dollars and convert when the rate suits you can save money on regular payments.

For tax purposes, income received in dollars generally needs to be converted to pounds. HMRC publishes exchange rates you can use, or you can use the rate on the day you received the money. Keep a record of the rates you use.

What moves the pound against the dollar?

Many factors influence the GBP/USD exchange rate. Interest rates set by the Bank of England and the US Federal Reserve are among the most important, because higher rates can attract investment into a currency. Inflation, economic growth figures, employment data, government borrowing and political events in both countries can all cause the rate to move, sometimes sharply. Because so many factors are involved, even professional traders can't reliably predict short-term movements.

For everyday purposes, it's usually more useful to focus on the costs you can control, such as fees and margins, than to try to time the market. If you're making a large one-off payment, such as buying property abroad, some specialist providers offer forward contracts that let you fix a rate for a future date, which can help with budgeting.