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What changed in Invesco CurrencyShares British Pound Sterling Trust's 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Invesco CurrencyShares British Pound Sterling Trust's 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+49 added−46 removedSource: 10-K (2024-02-23) vs 10-K (2023-02-24)

Top changes in Invesco CurrencyShares British Pound Sterling Trust's 2023 10-K

49 paragraphs added · 46 removed · 35 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeIf, on a particular evaluation day, the Closing Spot Rate has not been determined and announced by 6:00 PM (London time), then the most recent Closing Spot Rate is used to determine the NAV of the Trust unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate to use as the basis for the valuation. 1 The Trustee also determines the NAV per Share, which equals the NAV of the Trust divided by the number of outstanding Shares.
Biggest changeIf, on a particular evaluation day, the Closing Spot Rate has not been determined and announced by 6:00 PM (London time), then the most recent Closing Spot Rate is used to determine the NAV of the Trust unless the Trustee, in consultation with the Sponsor, determines that such price is inappropriate to use as the basis for the valuation.
The NAV of the Trust and the NAV per Share are published by the Sponsor on each day that NYSE Arca is open for regular trading and are posted on the Trust’s website, www.invesco.com/etfs. Depository and Deposit Accounts JPMorgan Chase Bank, N.A., London Branch, is the Depository.
The NAV of the Trust and the NAV per Share are published by the Sponsor on each day that NYSE Arca is open for regular trading and are posted on the Trust’s website, www.invesco.com/etfs. 1 Depository and Deposit Accounts JPMorgan Chase Bank, N.A., London Branch, is the Depository.
This amount is based on the combined NAV per Share of the number of Shares included in the Baskets being created or redeemed, determined on the day the order to create or redeem Baskets is accepted by the Trustee. 2 Only Authorized Participants may place orders to create and redeem Baskets.
This amount is based on the combined NAV per Share of the number of Shares included in the Baskets being created or redeemed, determined on the day the order to create or redeem Baskets is accepted by the Trustee. Only Authorized Participants may place orders to create and redeem Baskets.
Before initiating a creation or redemption order, an Authorized Participant must have entered into a Participant Agreement with the Sponsor and the Trustee. The Participant Agreement provides the procedures for the creation and redemption of Baskets and for the delivery of British Pound Sterling required for creations and redemptions.
Before initiating a creation or redemption order, an Authorized Participant must have entered into a Participant Agreement with the Sponsor and the Trustee. The Participant Agreement provides the procedures for the creation and redemption of Baskets and for 2 the delivery of British Pound Sterling required for creations and redemptions.
ITEM 1. BUSINESS Overview The Invesco CurrencyShares ® British Pound Sterling Trust (the “Trust”) is a grantor trust that was formed on June 8, 2006. The Shares began trading on the New York Stock Exchange under the ticker symbol “FXB” on June 26, 2006. The primary listing of the Shares was transferred to NYSE Arca, Inc.
ITEM 1. B USINESS. Overview The Invesco CurrencyShares ® British Pound Sterling Trust (the “Trust”) is a grantor trust that was formed on June 8, 2006. The Shares began trading on the New York Stock Exchange under the ticker symbol “FXB” on June 26, 2006. The primary listing of the Shares was transferred to NYSE Arca, Inc.
The Trust incurred $419,486 for the year ended December 31, 2022 in Sponsor’s fees. The Trustee The Bank of New York Mellon, a banking corporation with trust powers organized under the laws of the State of New York, serves as the Trustee. The Trustee is responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational records.
The Trust incurred $400,918 for the year ended December 31, 2023 in Sponsor’s fees. The Trustee The Bank of New York Mellon, a banking corporation with trust powers organized under the laws of the State of New York, serves as the Trustee. The Trustee is responsible for the day-to-day administration of the Trust, including keeping the Trust’s operational records.
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The Trustee also determines the NAV per Share, which equals the NAV of the Trust divided by the number of outstanding Shares.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

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Biggest changeConsequently, the price of the British Pound Sterling could decline, which would adversely affect an investment in the Shares. REGULATORY MATTERS Changes to United States tariff and trade policies may increase the volatility of foreign exchange rates. This volatility could materially and adversely affect the performance of the Shares.
Biggest changeREGULATORY MATTERS Changes to United States tariff and trade policies may increase the volatility of foreign exchange rates. This volatility could materially and adversely affect the performance of the Shares. There have been ongoing discussions and commentary regarding potential significant changes to United States trade policies, treaties and tariffs.
Cyber security failures or breaches of the Trust's third party service providers (including, but not limited to, the Trustee and the Sponsor) have the ability to cause disruptions and impact business operations, potentially resulting in 7 financial losses, the inability of Shareholders or Authorized Participants to transact business in Shares and Baskets respectively, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs.
Cyber security failures or breaches of the Trust's third party service providers (including, but not limited to, the Trustee and the Sponsor) have the ability to cause disruptions and impact business operations, potentially resulting in financial losses, the inability of Shareholders or Authorized Participants to transact business in Shares and Baskets respectively, violations of applicable privacy and other laws, regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, and/or additional compliance costs.
Shareholders may incur significant fees if they choose to convert the British Pounds Sterling they receive to USD. 6 DEPOSITARY TRUST AGREEMENT The Depository owes no fiduciary duties to the Trust or the Shareholders, is not required to act in their best interest and could resign or be removed by the Sponsor, which would trigger early termination of the Trust.
Shareholders may incur significant fees if they choose to convert the British Pounds Sterling they receive to USD. DEPOSITARY TRUST AGREEMENT The Depository owes no fiduciary duties to the Trust or the Shareholders, is not required to act in their best interest and could resign or be removed by the Sponsor, which would trigger early termination of the Trust.
In addition, the Trust may, in its discretion, suspend the creation of Baskets for any reason and at any time. If the process for creating or redeeming Shares is impaired for any reason, Authorized Participants and their clients or customers may not be able to purchase and redeem Baskets.
In addition, the Trust may, in its discretion, suspend the 4 creation of Baskets for any reason and at any time. If the process for creating or redeeming Shares is impaired for any reason, Authorized Participants and their clients or customers may not be able to purchase and redeem Baskets.
The relationship between the public trading price per Share and the NAV per Share depends, to a considerable degree, on the ability of 4 Authorized Participants or their clients or customers to purchase and redeem Baskets in the ordinary course.
The relationship between the public trading price per Share and the NAV per Share depends, to a considerable degree, on the ability of Authorized Participants or their clients or customers to purchase and redeem Baskets in the ordinary course.
Consequently, Shareholders do not have the regulatory protections afforded to investors in registered investment companies. 5 Shareholders do not have the rights enjoyed by investors in certain other financial instruments.
Consequently, Shareholders do not have the regulatory protections afforded to investors in registered investment companies. Shareholders do not have the rights enjoyed by investors in certain other financial instruments.
The License Agreement provides that either party may provide notice of intent to terminate the License Agreement in the event the other party commits a material breach.
The License Agreement provides that either party may provide notice 6 of intent to terminate the License Agreement in the event the other party commits a material breach.
In addition, a service provider that has experienced a cyber security incident may divert resources normally devoted to servicing the Trust to addressing the incident, which would be likely to have an adverse effect on the Trust's operations. ITEM 1B. UNRESOLVED STAFF COMMENTS None.
In addition, a service provider that has experienced a cyber security incident may divert resources normally devoted to servicing the Trust to addressing the incident, which would be likely to have an adverse effect on the Trust's operations. ITEM 1B. UNRESOLVE D STAFF COMMENTS. None.
Foreign exchange rates are influenced by the factors identified in the preceding risk factor and may also be influenced by: changing supply and demand for a particular currency; monetary policies of governments (including exchange control programs, restrictions on local exchanges or markets and limitations on foreign investment in a country or on investment by residents of a country in other countries); changes in balances of payments and trade; trade restrictions; and currency devaluations and revaluations. 3 Also, governments from time to time intervene in the currency markets, directly and by regulation, in order to influence prices directly.
Foreign exchange rates are influenced by the factors identified in the preceding risk factor and may also be influenced by: changing supply and demand for a particular currency; monetary policies of governments (including exchange control programs, restrictions on local exchanges or markets and limitations on foreign investment in a country or on investment by residents of a country in other countries); changes in balances of payments and trade; trade restrictions; and currency devaluations and revaluations.
If interest earned by the Trust does not exceed the Trust’s expenses, the Trustee will withdraw British Pounds Sterling from the Trust to pay these excess expenses, which will reduce the amount of British Pounds Sterling represented by each Share on an ongoing basis and may result in adverse tax consequences for Shareholders.
The resulting volatility in the British Pound Sterling/USD exchange rate could materially and adversely affect the performance of the Shares. 3 If interest earned by the Trust does not exceed the Trust’s expenses, the Trustee will withdraw British Pounds Sterling from the Trust to pay these excess expenses, which will reduce the amount of British Pounds Sterling represented by each Share on an ongoing basis and may result in adverse tax consequences for Shareholders.
Neither the Shares nor the Deposit Accounts and the British Pounds Sterling deposited in them are deposits insured against loss by the FDIC, any other federal agency of the United States or the Financial Services Compensation Scheme of England.
Neither the Shares nor the Deposit Accounts and the British Pounds Sterling deposited in them are deposits insured against loss by the FDIC, any other federal agency of the United States or the Financial Services Compensation Scheme of England. 5 Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940.
Cyber attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites.
Cyber attacks include, but are not limited to gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption. 7 Cyber attacks may also be carried out in a manner that does not require gaining unauthorized access, such as causing denial-of-service attacks on websites.
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These events and actions are unpredictable. The resulting volatility in the British Pound Sterling/USD exchange rate could materially and adversely affect the performance of the Shares.
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Also, governments from time to time intervene in the currency markets, directly and by regulation, in order to influence prices directly. These events and actions are unpredictable.
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There have been ongoing discussions and commentary regarding potential significant changes to United States trade policies, treaties and tariffs.
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Consequently, the price of the British Pound Sterling could decline, which would adversely affect an investment in the Shares. International Armed Conflicts May Result in Volatility in Currency Prices that Could Adversely Affect the Fund's Performance .
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Shareholders do not have the protections associated with ownership of shares in an investment company registered under the Investment Company Act of 1940.
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As a result of increasingly interconnected global economies and financial markets, armed conflict between countries or in a geographic region, for example the current conflicts between Russia and Ukraine in Europe and Hamas and Israel in the Middle East, may impact the value of the currencies held by the Fund.
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COVID-19 PANDEMIC The ongoing COVID-19 pandemic continues to impact global, regional and national economies in unexpected and unpredictable ways that could materially and adversely affect the value of the Shares.
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Such conflicts, and other corresponding events, have had, and could continue to have, severe effects on regional and global economic and financial markets, including increased volatility, reduced liquidity, and overall uncertainty. Pandemics and other public health emergencies could disrupt the global economy and adversely impact the Trust's performance.
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The ongoing COVID-19 pandemic continues to have material adverse effects on the global economy and has increased economic uncertainty and financial market volatility and caused a decline in consumer and business confidence.
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The impact of the COVID-19 pandemic was extensive in many aspects of society. The outbreak resulted in a significant number of deaths, adversely impacted global commercial activity, and led to significant uncertainty and disruptions in the global economy and financial markets.
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No assurance can be given that the disruption will end soon or that the value of the Shares will not be affected materially and adversely by the pandemic and its ongoing global economic impact. Escalation or prolonged continuation of the pandemic could exacerbate other risk factors identified in this Report and materially and adversely affect the value of the Shares.
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Many countries reacted by instituting quarantines, prohibitions on travel and the closure of offices, businesses, schools, retail stores and other public venues. Businesses also implemented similar precautionary measures. While restrictions have eased, it is possible that they may be reinstated in the future in response to new variants or new public health emergencies.
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In general, cyber incidents can result from deliberate attacks or unintentional events. Cyber attacks include, but are not limited to gaining unauthorized access to digital systems for purposes of misappropriating assets or sensitive information, corrupting data, or causing operational disruption.
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Such measures, as well as the general uncertainty surrounding the dangers and impact of a future public health crisis, may result in significant disruption in supply chains and economic activity. Consumer, corporate and financial confidence may be materially adversely affected by a future outbreak. Such erosion of confidence may lead to or extend to a localized or global economic downturn.
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Future pandemics and other public health emergencies could exacerbate political, social, and economic risks and result in significant breakdowns, delays, and other disruptions to the economy, with potential corresponding results on the value of the currency held by the Trust, which may adversely affect an investment in the Shares.
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In general, cyber incidents can result from deliberate attacks or unintentional events.

Item 2. Properties

Properties — owned and leased real estate

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Biggest changeITEM 2. PROPERTIES The Trust does not own or use physical properties in the conduct of its business. The Sponsor’s headquarters are located at 3500 Lacey Road, Suite 700, Downers Grove, Illinois 60515. ITEM 3. LEGAL PROCEEDINGS None. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 8 PART II
Biggest changeITEM 2. PR OPERTIES. The Trust does not own or use physical properties in the conduct of its business. The Sponsor’s headquarters are located at 3500 Lacey Road, Suite 700, Downers Grove, Illinois 60515. ITEM 3. LEGAL PROCEEDINGS. None. ITEM 4. MINE SAF ETY DISCLOSURES. Not applicable. 9 PAR T II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest change(c) Although the Trust did not redeem Shares directly from its shareholders, the Trust redeemed Baskets from Authorized Participants during the three months ended December 31, 2022 as follows: Period of Redemption Total Number of Shares Redeemed Average Price Paid per Share October 1, 2022 to October 31, 2022 600,000 $ 109.61 November 1, 2022 to November 30, 2022 50,000 $ 113.20 December 1, 2022 to December 31, 2022 50,000 $ 117.19 Total 700,000 $ 110.41 ITEM 6.
Biggest change(c) Although the Trust did not redeem Shares directly from its shareholders, the Trust redeemed Baskets from Authorized Participants during the three months ended December 31, 2023 as follows: Period of Redemption Total Number of Shares Redeemed Average Price Paid per Share October 1, 2023 to October 31, 2023 50,000 $ 118.39 November 1, 2023 to November 30, 2023 — $ — December 1, 2023 to December 31, 2023 50,000 $ 122.44 Total 100,000 $ 120.42 ITEM 6.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Market Information The Shares began trading on the New York Stock Exchange on June 26, 2006 under the symbol “FXB.” The primary listing of the Shares was transferred to NYSE Arca on October 30, 2007.
ITEM 5. MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOC KHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES. Market Information The Shares began trading on the New York Stock Exchange on June 26, 2006 under the symbol “FXB.” The primary listing of the Shares was transferred to NYSE Arca on October 30, 2007.
Holders As of January 31, 2023, the Trust had 82 holders of record of its Shares. Sales of Unregistered Securities and Use of Proceeds of Registered Securities (a) There have been no unregistered sales of the Shares. No Shares are authorized for issuance by the Trust under equity compensation plans. (b) Not applicable.
Holders As of January 31, 2024, the Trust had 77 holders of record of its Shares. Sales of Unregistered Securities and Use of Proceeds of Registered Securities (a) There have been no unregistered sales of the Shares. No Shares are authorized for issuance by the Trust under equity compensation plans. (b) Not applicable.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

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Biggest changeDistributions paid during the current reporting period follow (annualized yield reflects the estimated annual yield an investor would receive if a monthly distribution stayed the same for the entire year going forward, and is calculated by annualizing the monthly distribution and dividing by the Trust NAV for the dates listed below): FXB Distribution History Date Value NAV Yield Annualized Yield 10/3/2022 $ 0.06163 $ 107.30 0.06% 0.70% 11/1/2022 $ 0.09163 $ 110.69 0.08% 0.97% 12/1/2022 $ 0.14644 $ 114.55 0.13% 1.56% Results of Operations During the years ended December 31, 2022 and 2021, the Trust’s net comprehensive income (loss) was, in part, impacted by market volatility and uncertainty caused by the novel coronavirus known as COVID-19, which is considered to be an unusual or infrequent event.
Biggest changeDistributions paid during the current reporting period follow (annualized yield reflects the estimated annual yield an investor would receive if a monthly distribution stayed the same for the entire year going forward, and is calculated by annualizing the monthly distribution and dividing by the Trust NAV for the dates listed below): FXB Distribution History Date Value NAV Yield Annualized Yield 10/2/2023 $ 0.31363 $ 117.57 0.27% 3.25% 11/1/2023 $ 0.32283 $ 116.89 0.28% 3.25% 12/1/2023 $ 0.32451 $ 121.94 0.27% 3.24% Results of Operations During the years ended December 31, 2023 and 2022, the Trust's net comprehensive income (loss) was, in part, impacted by market volatility resulting from the US banking sector turmoil, ambiguity around the Federal Reserve's tightening cycle, and rising geopolitical concerns from the conflict in the Middle East, for 2023, and uncertainty caused by the novel coronavirus known as COVID-19, as well as the Russia-Ukraine conflict, for 2022, which are considered to be unusual or infrequent events.
The chart illustrates movements in the price of the British Pound Sterling in USD and is based on the Closing Spot Rate: 10 NAV per Share; Valuation of the British Pound Sterling The following chart illustrates the movement in the price of the Shares based on (1) NAV per Share, (2) the “bid” and “ask” midpoint offered on NYSE Arca and (3) the Closing Spot Rate, expressed as a multiple of 100 British Pounds Sterling: Liquidity and Capital Resources The Sponsor is not aware of any known trends, demands, commitments, events or uncertainties that will result in, or are reasonably likely to result in, material changes to the Trust’s liquidity and capital resources needs.
The chart illustrates movements in the price of the British Pound Sterling in USD and is based on the Closing Spot Rate: 11 NAV per Share; Valuation of the British Pound Sterling The following chart illustrates the movement in the price of the Shares based on (1) NAV per Share, (2) the “bid” and “ask” midpoint offered on NYSE Arca and (3) the Closing Spot Rate, expressed as a multiple of 100 British Pounds Sterling: Liquidity and Capital Resources The Sponsor is not aware of any known trends, demands, commitments, events or uncertainties that will result in, or are reasonably likely to result in, material changes to the Trust’s liquidity and capital resources needs.
Each month the Depository deposits into the secondary deposit account accrued but unpaid interest, if any, and the Trustee withdraws British Pounds Sterling from the secondary deposit account to pay the accrued Sponsor’s fee for the previous month plus other Trust expenses, if any.
Each month the Depository deposits into the secondary 12 deposit account accrued but unpaid interest, if any, and the Trustee withdraws British Pounds Sterling from the secondary deposit account to pay the accrued Sponsor’s fee for the previous month plus other Trust expenses, if any.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The following discussion and analysis was prepared to supplement information contained in the accompanying financial statements and is intended to explain certain items regarding the Trust's financial condition as of December 31, 2022, and its results of operations for the fiscal years ended December 31, 2022 and December 31, 2021.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Introduction The following discussion and analysis was prepared to supplement information contained in the accompanying financial statements and is intended to explain certain items regarding the Trust's financial condition as of December 31, 2023, and its results of operations for the fiscal years ended December 31, 2023 and December 31, 2022.
In addition to the description below, please refer to Note 3 to the financial statements for further discussion of our accounting policies. The functional currency of the Trust is the British Pound Sterling in accordance with ASC 830, Foreign Currency Translation. 12
In addition to the description below, please refer to Note 3 to the financial statements for further discussion of our accounting policies. The functional currency of the Trust is the British Pound Sterling in accordance with ASC 830, Foreign Currency Translation. 13
However, the GBP gained nearly 8% against the USD in Q4 as the dollar weakened amid growing expectations for a moderation in Fed rate hikes, following the larger-than-expected drop in US inflation.
However, the GBP gained nearly 8% against the USD in the fourth quarter as the dollar weakened amid growing expectations for a moderation in Fed rate hikes, following the larger-than-expected drop in US inflation.
Additionally, given Europe’s geographical proximity and strong reliance on Russian commodities, especially natural gas, developments in the Ukraine war and resulting retaliatory/punitive actions leading to the deepening energy crisis in Q2 and Q3, weighed heavily on European currencies, pushing the Fund’s NAV to the lowest level since its inception back in 2006.
Additionally, given Europe’s geographical proximity and strong reliance on Russian commodities, especially natural gas, developments in the Ukraine war and resulting retaliatory/punitive actions leading to the deepening energy crisis in the second and third quarter, weighed heavily on European currencies, pushing the Fund’s NAV to the lowest level since its inception back in 2006.
The interest rate in effect as of December 31, 2022 was an annual nominal rate of 2.00%. The following chart provides the daily rate paid by the Depository since December 31, 2017: 11 In exchange for a fee, the Sponsor bears most of the expenses incurred by the Trust.
The interest rate in effect as of December 31, 2023 was an annual nominal rate of 3.66%. The following chart provides the daily rate paid by the Depository since December 31, 2018: In exchange for a fee, the Sponsor bears most of the expenses incurred by the Trust.
Although the full and direct impact of COVID-19 on the Trust’s net comprehensive income (loss) during the years ended December 31, 2021 and 2020 cannot be known, it is believed that COVID-19 has impacted the Closing Spot Rate, the interest rate paid by the Depository, and the global economy and markets generally, including the number of Shares created and redeemed by the Trust.
Although the full and direct impact of the COVID-19 pandemic, the Russia-Ukraine conflict, the US banking sector turmoil, and the Israel-Gaza conflict on the Trust's net comprehensive income (loss) during the years ended December 31, 2023 and 2022 cannot be known, it is believed that they have each independently impacted the Closing Spot Rate, the interest rate paid by the Depository, and the global economy and markets generally, including the number of Shares created and redeemed by the Trust.
The British Pound Sterling (GBP/USD) fell sharply in the first three quarters of the year before partially reversing some of the losses in Q4. The currency pair was weighed down heavily by persistent dollar strength given the U.S. Federal Reserve System (the "Fed") is more hawkish stance on policy tightening and strengthening safe haven demand from growing global recession fears.
The currency pair was weighed down heavily by persistent dollar strength given the U.S. Federal Reserve System (the "Fed") is more hawkish stance on policy tightening and strengthening safe haven demand from growing global recession fears.
As long as the Sponsor’s fee and the interest expense on currency deposits, if any, exceed interest income, the Trust will incur a net comprehensive loss.
Additionally, the interest rate paid by the Depository has generally trended upward over the past year from sub-zero, to the current interest rate of 3.66%, as set forth in the FXB Rate Chart above. As long as the Sponsor’s fee and the interest expense on currency deposits, if any, exceed interest income, the Trust will incur a net comprehensive loss.
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The British Pound Sterling (GBP/USD) ended 2021 with a slightly negative performance, as tightening restrictions to curb the spread of the COVID-19 Omicron variant in the United Kingdom threatened to derail the Bank of England’s rate hike plans.
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The British pound sterling (GBP/USD) ended 2023 in positive territory. While in the first quarter, the sterling was largely driven by US dollar moves, the Bank of England’s aggressive rate hikes to tame stubborn domestic inflation helped the pair rally significantly through March onwards.
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In the first half of 2021, an improving domestic economic growth outlook and gradual reopenings, driven by the United Kingdom’s speedy vaccine rollout and a general firming in the market’s risk appetite (which tends to weigh on the U.S.
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The USD fell in early-March through early May on expectations for a dovish Fed pivot, especially in the midst of the banking sector turmoil and contagion fears. However, the dollar rebounded in May as the Fed signaled that there was potential for more interest rate hikes before year-end.
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Dollar given its perception as one of the world’s safe haven currencies), helped the GBP/USD currency pair recover to nearly the highest level since 2018, before giving up all its gains to the COVID-19 Omicron variant in late 2021.
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The sterling spiked again in June as the hawkish BoE returned to center stage and the dollar retreated.
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Additionally, the interest rate paid by the Depository has generally trended downward over the past several years, slightly offset by improvements this year to the current interest rate of 2.00%, as set forth in the FXB Rate Chart above.
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While the pair was heavily pressured in the third quarter as recession concerns grew in the UK leading the BoE to pause its tightening while the Fed maintained its higher-for-longer narrative, the pair recovered sharply in the fourth quarter on renewed dollar weakness as rate cut expectations in the US became more concrete The British Pound Sterling (GBP/USD) fell sharply in the first three quarters of the 2022 before partially reversing some of the losses in the fourth quarter.

Item 7A. Quantitative and Qualitative Disclosures About Market Risk

Market Risk — interest-rate, FX, commodity exposure

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Biggest changeITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK Except as described above with respect to fluctuations in the British Pound Sterling/USD exchange rate and changes in the nominal annual interest rate paid by the Depository on British Pound Sterling held by the Trust, the Trust is not subject to market risk.
Biggest changeITEM 7A. QUANTITATIVE AND QUALITAT IVE DISCLOSURES ABOUT MARKET RISK Except as described above with respect to fluctuations in the British Pound Sterling/USD exchange rate and changes in the nominal annual interest rate paid by the Depository on British Pound Sterling held by the Trust, the Trust is not subject to market risk.
The Trust does not hold securities and does not invest in derivative instruments. 13
The Trust does not hold securities and does not invest in derivative instruments. 14

Other FXB 10-K year-over-year comparisons