The GBP/USD Currency Pair (British Pound / US Dollar) is the exchange rate of the British Pound expressed in U.S. dollars. It expresses the value of one British Pound in U.S. dollars. Forex professionals also call it the cable.
The GBP/USDis the third most traded pair and represents 9% of the total of transactions on the FOREX in 2010. The GBP/USD is known for its volatility. From 2008 to 2010, the volatility of the pair British Pound / U.S. Dollar was approximately of 200 pips. As a result, many speculators trade it on the short term to capture some of this volatility. For scalper Forex, GBP/USD is therefore appropriate.
These large variations are due in particular to the various economic announcements that occur throughout the day. The economic news on the GBP (British Pound) are published most often in the morning and 10:30 (GMT+1) and at 14h30, it is the turn of announcements on US Dollar
Since its creation, the GBP/USD has fluctuated between $ 1.3504 reached in January 2009 and reached $ 2.11 in November 2007.
Both central banks linked to the pair Euro / US Dollar are the Bank of England (BoE) for the GBP and the Federal Reserve (FED) for the USD. Both banks rarely intervene directly to change the exchange rate. However, all decisions taken by these two central banks have a strong impact on the evolution of the GBP/USD (changing interest rates, asset buyback program ….
Currency pairs are distinguished on the basis of their trading features and behavior. The behavior and characteristics of the GBP/USD (Great Britain Pound/US Dollar) pair: It is also known as the Cable and is more volatile than the Euro and the Swissy, with its daily trade clocking up to 130 Pips on an average in 2005 & 2006. As mentioned earlier, it shares a direct relationship with the Euro and both tend to move in the same direction. The movement of the GPP is, though, more volatile and jerky.
Most of the online forex brokers charge a spread of three to four PIPs. The Cable’s movement and active trading times are similar to the Euro and the Swissy: Low movement and liquidity in the Asian time zone (daily volume is around 30 PIPs), high liquidity in the European and the US time zones (daily volume is around 100 PIPs in the European time zone and around 50-60 PIPs in the New York time period), until the New York market closes.
The rise in crude oil prices used to benefit the Cable, since the UK was an oil exporter. The UK benefit story was driven by the fact that the oil price rise led to an increase in the income from exports for an island/country or region, thus increasing the value of its currency. The situation has now changed and the UK does not produce enough oil to meet even its own needs and has to import oil, thus removing the benefit accrued from the oil crisis.