As the worlds two most advanced economies, the British Pound/U.S. Dollar pairing offers numerous resources to search price information and data. As the worlds two most traded currencies, The GBP/USD Currency Pair has attracted day traders from around the globe. The GBP/USD is the fourth-most traded currency pairing in the Forex trading markets, giving it plenty of liquidity and low spreads. While currency pairs vary in spreads between brokers, in general, GBP/USD usually stays in a 1pips – 3pips range, making it a decent scalping candidate.
Diverse Trading Vehicles: The British Pound/U.S. Dollar Pair is one of the most liquid, liquidity-rich, and third-most traded of the main currencies, comprising 9.6% of the overall trading volumes in the forex market.
Because FX markets are open 24/7, it is often assumed that one should be trading the British pound/US dollar pairing throughout the day. Just because the FX market is open 24/7 does not mean every single one of those hours is a good time to be trading. Since the various international markets are staggered in hours, you can trade Forex all around the clock.
As a rule of thumb, day trade only in hours when prices are moving at least 15 Pips or more (preferably more). If you cannot trade at 8am – 1,000am, day trade the GBP/USD somewhere else in between 6am – 1600 GMT. If trading GBP/USD, then it is probably that time of the day that is going to be the most active time on average for GBP/USD is going to be the hours that London and New York are open, according to the times in the attached graph.
Trading GBP/USDWhilst many traders, and even brokers, will argue that the best times to trade GBP/USD are in the more active hours of London and New York, doing this may prove a double-edged sword, because of the frequently unpredictable nature of the pair. Manipulation: Those who trade the GBP/USD on a daily basis will enjoy the advantage of having significant amounts of pip on the exchange rate on individual moves, when compared with other top pairs. The GBP/USD, at 1.40 cross rates as of June 23, 2021, has specific hours that make the most sense to day trade, as there is sufficient volatility to create profits beyond the cost of the spread and/or fees.
Before you choose to trade in forex, you need to think carefully about your investment objectives, your level of expertise, and your appetite for risk. You should understand all of the risks associated with foreign currency trading, and should consult with an independent financial adviser if you have any questions. You need to know the risks involved with investing in Forex and you need to be prepared to take risks in order to trade on those markets. Trading forex on margin involves high levels of risk, which may not be appropriate for all investors.
Like all investments, investing in currencies involves risks, particularly in times of volatile economy or periods of high geopolitical tension. Please keep yourself fully informed about the risks and costs associated with trading the financial markets, which are among the most risky forms of investing available.
Opportunities & risks in forex trading Opportunities forex trading is highly popular, therefore markets usually have a lot of liquidity and lower trading fees. The most popular way of investing in currencies is through currency trading on forex, but investors may choose to purchase mutual funds, ETFs, or ETNs. Exchange-traded funds (ETFs) and exchange-traded notes (ETNs) are traded just like stocks, and they can be a way to invest in currencies without trading the forex.
For example, if you are trading sterling vs. Japanese yen (GBP/JPY), you are effectively investing in a derivative of the GBP/USD and USD/JPY pairs. The currencies are traded in pairs: you are betting that one is going to rise (long) and that one is going to fall (short). When London (and Europe) is open for business, pairs that include the euro (EUR), British pound (GBP) and the Swiss franc (CHF) are most heavily traded.
Trade has existed between these two nations for so long, there is no viable way of proposing a starting pound-dollar exchange rate. The Northern Ireland Protocol situation still looms over the pound/dollar like a sword from Damocles. If recent increases in GBP/USD are reflecting anything, it is that lower bond yields in the U.S. are dampening relative returns between the two currencies. At time of writing, GBP/USD is trading higher 2.03% at 1.25089, supported by the generally weaker U.S. dollar.
The euro/dollar pairing maintained its positive tone throughout Tuesday, trading early Tuesday at the highest level in one month. A sharp upwards move from its 21-day moving average, at about 1.2440 at the press time, has pushed the GBP/USD to the highest level in the month, which is framed by 1.2640. The hold-out puts a floor under GBP/USD, but a lower price remains well above the rising 100-hour moving average (blue line on chart above).
Exchange rate risk, also called currency risk, occurs when the price of one currency changes relative to another. Headlines concerning Brexit, inflation, and Russia are also going to be key to GBP/USDs direction over the short-term. Frankly, it is more than likely that markets are going to be seeing negative news from around, so people are going to look towards the greenback as safety.
GBPUSD, which is also known as Cable by forex traders, is the ticker symbol on the forex markets representing how much you can buy with a single British Pound. GBP/USD is the currency pairing encompassing the UKs currency, the British pound (symbol PS, code GBP), and the United States dollar (symbol $, code USD).