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Money of a defined standard weight or fineness. Although usually associated with silver, it applies equally to gold. The gold pound sterling which took the place of the silver pound sterling in 1816 is 22 carats or 91.66 per cent fine gold. The word ‘sterling’ is traditionally derived from the term ‘easterling’, which was the name given to North German merchants who settled in London under Edward I. Their money was considered particularly good and 240 of their silver pennies, or ‘sterling’s’, came to be known as the pound sterling, as in Troy measure they weighed one pound. This silver was of a standard of 92.5 per cent pure, and silver goods are still of this standard fineness even though the silver coinage was debased in 1920.

The commercial importance of the term ‘pound sterling’ is merely to distinguish that unit of currency from others, particularly pound units in other currencies.

Reference: The Penguin Business Dictionary, 3rd edt.