There are numerous similarities between these two nations. For instance, both are ranked as the global elite, according to the GDP buying power parity. Also, both countries possess considerable human force. Both rely on their service sector of economies to produce annual GDP.
The British pound, also famously known as ‘pound sterling”, is the third most traded currency in today’s forex market. It is also the third-largest reserve currency in the world with the United States dollar and euro on the top. Whereas the USD is the world’s reserve currency. 62% of the global foreign exchange reserves in the central banks are denominated in USD.
Why would you day trade GPB/USD?
There are numerous reasons why thousands of people wake up every day and motivated to trade the cable. Some are:
- Volatility: You will see a broad range in the cable price as compared to the other pairs. It is due to volatility and predictability.
- Resources: You have long-term charts, 1-minute data, graph history available in just one click. It makes cable currency trading easy for you.
- Maneuverability: The people who day trade GBP/USD enjoy great benefits as compared to those who day trade other pairs. This makes it perfect for breakout trading.
- Safety: GBP/USD offers excellent resources for finding the information. As most of the volume traded in the forex market goes through London, this gives volatility and volume.
What are the risks in trading gbp usd currency pairs?
Where there are numerous profits, there are certain risks also.
- Ambiguity: Often, the volatility results in false breakouts and signals. Traders with less experience might become a victim of misleading signals.
- Fast movement: GBP/USD can move quickly. While it is great for active and decisive traders, it can be a significant factor for loss.
- Massive report: If you are strictly relying on closing prices and daily ranges, you will be disappointed. The cable currency significantly responds to UK economic report.
What factors influence the movement in the gbp usd currency pair?
Several factors play a significant role in shaping prices and market values. These are the few which affects the rate of trading the cable:
- Political events: Political decisions are seen to be triggering the movement in GBP/USD currency pairing. Elections have a noticeable impact on the currency pair.
- Economic growth: When the US economy looks stronger in the UK, the rate of the dollar rises against the pound. And the opposite happens when the UK economy outperforms US’. Labour productivity, interest rates, increased investments can all boost the growth.
- Monetary policy: If you study the history of this currency cable price, you will see that the Fed and BoE can seriously affect the rates.
So, if you are attentive towards the latest news and events going around, you can predict the gbp usd currency pair price.