I receive "incompatible character encodings: CP850 and UTF-8" when displaying the £ symbol on my ramaze app

Try to force the encoding to see if that makes the problem go away:

your_string.force_encoding(::Encoding::UTF_8)

If it does, dive into your app and spot what is setting the wrong encoding, where, and why.

It's possibly server-/webpage-related, as in the page you're serving is rendered as US-ASCII owing to a header. Or the server is started with encoding other than UTF-8. Or something other to that effect. Your script ends up with a piece of external data that isn't UTF-8.