If £1 is £1 how does the value of it change? It’s still 100p so shouldn’t there be a set conversion rate? I don’t understand how the VALUE of it changes.
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There isn’t exactly a true y USD = x GBP = z Yen. Often you have to look at how each interacts with its own economy. If 1 USD = 1 Generic-product in the US, while 1 GBP = 2 Generic-product in the UK, it would be silly to make 1 USD an equivilent exchange to 1 GBP, as in this super simplified case the latter has twice the buying power.
So in the actually very complicated case, you’re looking still at buying power, but in a more economy-wide level. Fluctuations happen between currency exchange rates because the “value” of each currency isn’t completely stable over time. 1 USD gets you less than 1 GBP, but significantly more than 1 Yen. How much more/less depends on the time and state of the countries using these currencies, and the exchange rate reflects that.
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