GBP USD Investing
Minimum spread- 0.3
Typical spread- 2.9
Minimum nominal trade size- 1000
Overnight interest (annual) sell- -1.20%
Overnight interest (annual) buy- -0.1.00%
Trading hours (GMT) – 24*5
GBP/USD is the ticker that represents the strength of the pound against the U.S dollars. GBP/USD is one of the major pairs in Forex. Being a popular and oldest pair in the currency market, it offers great advantages over other pairs such as deeper liquidity, tighter spreads. This pair is often called cable in honour of the first transatlantic communication cable. It was used to exchange currency prices between the United Kingdom and the United States.
In the GBP/USD currency pair, GBP represents the pound sterling, which is the base currency, and USD represents the US dollar, which represents the quote currency and at any given point of time GBP/USD represents the number of dollars it would take to exchange for one pound.
The pound is the national currency of Great Britain and has played a significant role in the currency market. During the 18th-century pound has been a part of reserve currencies for gold and other commodities. Pound use to be the dominating currency in the financial world before the World War 1, After the Second World War it was replaced like many other currencies by the US dollar, after the establishment of European Union, it became the third important currency in terms of total turnover for mutual settlements and demand. The pounds come in third after EURO.
Highs and Lows
The popular Forex pair GBP/USD made an all-time high of 2.4546 in November 1980 and an all-time record low 1.05 of 1.042 in February 1985. During the time of financial crisis in year 2007/2008 GBU/USD, pair reached a high of 2.11 and low of 1.426.
The pair dropped 25% on September 16, 1992, after Britain announced its exit from the European Exchange rate mechanism due to which that day is referred to as Black Friday.
During the resent time in 2016, when Britain confirmed exit from the European Union after the Brexit vote, the pair lost more than 10% in a single day.
Understanding the EUR/USD price
The rule to read the price quote is similar to any other pair. In GBP/USD, the pound represents the base currency in relation to the U.S dollar. Thus when the GBP/USD rally that means the pound is gaining strength over the U.S dollar and the pound loses its strength when GBP/USD falls. The price quote of GBP/USD means the amount of dollar, which is equivalent to one pound. For example, when GBP/USD quotes 1.3152 prices, it means one pound is equivalent to 1.3152 U.S dollar.
Key Factors to keep in mind while trading EUR/USD
Monetary Policy Impact
Monetary policy is one of the most important factors which can influence the GBP/USD price movement. In the UK, the Bank of England controls the rate and updates are released every month. The change in the interest rate can cause a considerable movement in the GBP/USD price.
The Federal Reserve is also an important body which often followed by traders to anticipate the price movement. The Fed is an independent supervisory federal agency that includes 12 reserve banks in different states, which in turn have thousands of commercial banks. The Fed revises the Federal funds rate eight times a year.
Any political unrest can cause a significant effect on the GBP/USD pair. For example, news related to the Brexit deal, U.S-China Trade deal.
The economic calendar offers a significant amount of information. Some of the most important data are:
- CPI-consumer Price Index
- GDP– gross domestic product
- PMI– purchasing managers index
- Trade balance
Why trade in EUR/USD with CAPITAL STREET
- BROAD RANGE OF MARKETS- Access to the popular Forex markets, including major, minor and exotic pairs
- CSFX offers you our state of the art platforms and range of trading tools
- Trade using Margin- Get greater exposure to the marketplace with a small deposit and spread your capital using margin.
- Automate your trade facilities and direct access to the market
- Safety of funds