Term originated in the UK and came to prominence in the 1960's, initially to describe a pimp. In Spanish it means "prince" and could have either been referring to the fancy, over-the-top clothing and jewelry popular with pimps, or because he was surrounded by a harem of women, involved in the underworld, but usually not the actual "king" of the area (he had to pay tribute to use the block or neighborhood).
Now it is generally used to refer to someone (usually a male) who dresses in nicer clothing and acts in a polished fashion; often interchangable with fag or pussy, but not necessarily as derogatory: a ponce is not necessarily homosexual, nor are they necessarily passive or weak, but they would tend to be thought of as metrosexual or gay in their manner of dress.
In the US it also takes a bit of a tone for a poser or wannabe, primarily in the punk, ska, or artsy scenes.
JACK: Oi, I need to find me a classy bird for the night.
TOM: Go talk to that ponce Tony. He got some nice girls, by the hour, they are.
JACK: Tony's a ponce, is that right? I though he just had some sort of magic with the ladies.
TOM: Fuckin' prat, you are.
NIGEL: I can't believe I got curry on me new Pradas! I just paid five hundred quid for em!
ANDY: Haha, you fuckin' ponce, that's what you get.
NIGEL: Fuck you, you fookin' chav, at least me Burberry's real.
ANDY: Right. You're still a ponce.
DAVE: Hey man, wanna come into the woods with us and blaze?
FRED: No thanks, dude. I've got a date tonight and I don't wanna get my jeans dirty or sound like a retard when I'm talking to her.
DAVE: Quit being a fucking ponce and come on, man. This shit's good.
FRED: Alright, fine.
"Tim is a ponce; he thinks that Blink 182 is punk."
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