The speculative attack on the British pound in 1967 succeeded because
A)the pound was seriously undervalued relative to the dollar.
B)Britain decided to drop out of the Bretton Woods system.
C)British exports greatly exceeded British imports, causing a large inflow of gold.
D)the Bank of England lacked the international reserves to defend the existing exchange rate indefinitely.

Question

Quizplus · Accepted Answer

The key factor in the speculative attack on the British pound in 1967 was that the Bank of England lacked the necessary international reserves to defend the existing exchange rate indefinitely. The other options mentioned in the question (undervaluation of the pound, Britain dropping out of the Bretton Woods system, and a large inflow of gold due to export surplus) were not the primary reasons for the attack's success.

The Speculative Attack on the British Pound in 1967 Succeeded