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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The value of it is measured against what it can purchase; it’s purchasing power. This changes because of inflation (or less typically, deflation).
Another way to measure it is against another currency (typically the US dollar). This rate is constantly being reassessed (and typically changing) by the law of supply and demand. The £ is constantly being bought and sold on the currency markets. If there is high demand for it, its exchange rate will rise. Low demand means its exchange rate will fall.
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