GBPUSD

GBPUSD Trading

Introduction

One of the oldest traded currency pairs is GBPUSD. It is often referred to as “The Cable,” a foreign-exchange term used to describe the British pound vs. the US dollar. The British Pound is the base currency, the US Dollar is the quote currency, and the GBP – USD exchange rate is 1.30000. In terms of currencies, the US dollar is the “base currency” of the pound. In the case of a pair where the pound is both base currencies. It takes 1:30 to buy a pound in US dollars.
 

Historical Summary of GBPUSD

GBPUSD is one of the earliest currency pairs to have dealt with. In July 1866, the British pound and the US dollar was the first reliable exchange rate that succeeds between the London and New York. Today the Transatlantic links are done by optic fiber cables followed by satellites. The history of the GBP / USD is as long and complex as any currency pair. You can name, but it is not unique to sterling or the dollar.  The gold standard determines, and regulated the exchange rate between the US dollar and other currencies of the United States.

About GBP

GBP is the official currency of the United Kingdom, Jersey, Guernsey,the Isle of Man, Gibraltar, South Georgia. Also, others are the South Sandwich Islands, the British Antarctic Territory, and Tristan da Cunha. It is divided into 100 pence (singular: penny, abbreviated: p). The Pound Sterling is the most used currency. Additionally, some countries that don’t use sterling have currencies called the pound.

About USD

The dollar of the United States with sign: $; code: USD. It is also abbreviated US$ and referred to as the dollar. In accordance with Coinage Act of 1792, US dollar is the official currency of the United States and its territories. One dollar is split into 100 cents (symbol: €) or 1000 mills. For accounting and tax purposes; its symbol: €). The 1792 Coinage Act created a decimal currency by creating the coins in dime, nickel, and penny. The act has produced coins in cents, half dollars, and quarters dollars. All those coins will also be minted in 2020.

Fundamental and Technical Analysis for GBPUSD

A common misconception in day-to-day GBP / USD trading is that currency markets are open 24 hours a day. Trading platforms that buy and sell throughout the day should be aligned with this. At the highest cost of spreads and commissions, successful day traders will hone in on the times. That is the best opportunity to make profits.

The point of this example strategy is to use technical analysis as a parameter in your trading strategy. You do not have to rely on a trading plan for the long-term direction of the GBPUSD or any other major currency. Determine whether you believe the market will get higher when you buy or lower when you sell and if so, by how much. When you start trading Forex, you will find that your success depends on being up to date with the latest news, analysis, and forecasts. CFDs are complex instruments and involve a high risk of losing money due to leverage.Read More

What are the best techniques when trading GBP/USD?

The best Forex strategy is learning how to exchange Forex, and not relying on a single currency pair. The basic Forex techniques when trading GBPUSD are as follows:
 
 1.  Know the main factors on a macroeconomic basis for the countries to which the currencies are linked.
 2. Link it to the status of the United Kingdom and the United States (if you look at GBPUSD),
3. If your research and general opinion need to be confirmed, inform yourself by looking at the right information.
4. Study mass media and high-frequency,
5. Incentivised forex signal suppliers.

GBPUSD Correlation

The British pound is considered the main currency in the GBPUSD, and the word currency is called the US dollar. The currency pair quotation indicates how many US dollars it takes to acquire one British pound. Let’s say the exchange rate for GBP/USD reads 1.2500 for example. When purchasing, the quote shows how many units of the terms currency are necessary to purchase one unit of the base currency. So in this example, to buy 1 GBP you need 1.25 USD. When selling, the quote shows how many units of the currency terms you get for selling one base currency unit. It implies that when you sell 1 GBP, you’ll receive 1.25 USD.

What is the best time to trade GBPUSD?

The best time to trade GBPUSD is between 7 am and 6 pm GMT, Monday through Friday. The market has good volatility during these 11 hours and it draws good signals to open and close orders. There are days when the market is trading almost the whole day in a tiny corridor or at 5–6 pm or even later it can give a trend in the evening.

What Drives GBP/USD Price Action?

With the UK being such a big country, there are actually quite a few variables affecting the GBPUSD pair prices. The following are the key factors driving prices in GBPUSD pair:

  1. State of the related economies: As a country’s economy prospers, demand for its currency will rise. Whenever there’s a tip in the balance, say the US economy is thriving while the UK economy is struggling. You’re likely to see the impact of this imbalance reflected in the value of the two currencies associated with it.
  2. Bank of England Policies: The central bank of the United Kingdom holds an official meeting once a month. They publish the latest Monetary Policy Summary Report of the Bank of England. This report outlines all the decisions the central bank members have made. Either to lower interest rates, boost interest rates, or make no changes at all to the rates. 
  3. Politics and Elections: Political events such as Brexit can trigger massive currency price moves. Government elections can also have a huge impact on the GBP/USD pair, particularly key elections such as the US presidential election.
  4. Economic data: While each of the above-mentioned events can affect long-term market price trends. There are lesser-known economic data announcements that have a short-term impact on the price of those currencies. 

Will GBP rise against USD?

For many aspiring traders, the next question arises: How will the GBP / USD exchange rate develop against the US dollar in the short term?
Many traders believe that the USD exchange rates they monitor will help them predict whether the currency pair will rise or fall. If you think the GBP will rise or fall against the USD, you can test your trading ideas by trading with our free demo account. The GBP / USD is one of the most widely traded currency pairs in the world, . Although, the UK is the largest trading nation. There are many factors influencing the price of both the pound and the dollar. Such as the strength of the US dollar against other currencies, the global economy, and international trade. 
As a result, the value of both currencies is affected relative to each other. This is influenced by a number of factors affecting both the price of the pound and the dollar, as well as the global economy and international trade. 

FAQ's

Yes, trading GBPUSD after studying the fundamental and technical analysis does generate profit. Trade at the best time.

Bank of England Policies. Politics, State of the related economies, and Economic data.