An Effective Exchange Rate for the Pound in the 1930's

Until comparatively recentlt the normal method of quoting exchange rates has been to use a numeraire currency, usually the pound or the dollar. In periods where the majority of countries have maintained fixed gold parities this has proved an accurate method of expressing the exchange value of a currency. Even if a country were to temporarily set it's currency adrift, as Canada did in the 1950's, so long as the rest of the world maintained fixed exchange rates the use of a numeraire to indicate the value of a floating currency was quite acceptable. However, the widespread adoption of floating exchange rates in the 1970's has made the numeraire currency method to some extent misleading and consequently a new method of quoting exchange rate values has been developed which gives a better indication of the overall value of a currency ; this is provided by a currency's "effective" exchange rate which is weighted average of it's movements against all other currencies. No-one has yet, however, extended this new method back to other periods of widespread floating exchange rates and this is the object of the present study : to begin this process by calculating an effective exchange rate for the pound in the 1930s.