How to trade GBP/USD

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Learn everything you need to know about the GBP/USD, one of the most popular currency pairs among Forex traders. Check out our experts’ list of the best brokers to trade GBP/USD and trade with confidence.

Brokers to trade GBP/USD

Introduction to GBP/USD

The GBP/USD is the second most traded currency pair by traders on Forex. It consists of the pound sterling, the official currency of the United Kingdom and also the oldest currency still in operation, and the US dollar, the official currency of the United States.

The value of the GBP/USD pair is set by the degree of interest rate differential that occurs between the exchange rate of the Central Bank of England and the exchange rate set by the US Federal Reserve.

As with any other currency pair, economic, political, social and other factors affect the GBP/USD causing its price to fluctuate both up and down.

Why invest in GBP/USD?

The pound and the dollar are two of the most widely traded currencies in the world. It is no coincidence that the GBP/USD is one of the most traded currencies among Forex traders.

Sterling is particularly sensitive to rate changes by the Bank of the United Kingdom and, in general, sterling exhibits relatively easy-to-predict swings and spontaneous spikes.

Although compared to the most traded currency pair (EUR/USD) the GBP/EUR does not have the same level of liquidity, its high volatility makes it interesting for experienced investors. Hence its popularity.

Real Time Pound Dollar Quotation

One of the most important parts of forex trading is the analysis of the short and long term performance of currency pairs.

Thanks to the charts, you will be able to consult in real time the changes in the pound/dollar exchange rate. Use all the options to analyse the evolution of this pair in both the short and long term.

How to invest in GBP/USD?

As a general rule, when investing in currencies, it is necessary to analyse their market performance. This becomes even more essential when trading GBP/USD given the historically volatile nature of sterling, which makes false trend breaks a common occurrence.

Although not without an important intuitive component, when investing in currencies it is necessary to carry out fundamental analysis of the economic indicators that affect each of the currencies in which we decide to invest. Even so, there are a number of basic guidelines to follow that will help us to decide our investment strategy for the GBP/USD pair.

Investment strategy for GBP/USD

The best strategy when investing in GBP/USD is to take advantage of the fluctuating nature of the pound. To do so, we should anticipate events that may have an impact on its value. In other words, we try to take advantage of the GBP’s high volatility and use it to our advantage.

Although the GBP/USD may show significant price swings, in general it is a reliable pair with continuous market patterns and trends. Leverage is used very frequently by traders who trade this pair.

A key part of this will be to keep an eye on the economic calendar, where we will need to identify any potential dates when the value of the pound is likely to fluctuate. A sales report in a major US sector may serve as an example of an event likely to cause one of the fluctuations we are expecting.

Factors which may influence the GBP/USD pair

Among the long list of factors or indicators are US and UK economic factors, interest rates set by the US Federal Government and any political events that impact the value of currencies.

For example, during the inaugural week of Donald Trump’s administration, the GBP/USD price declined sharply due to market uncertainty about the impact of the new administration on the US economy.

Technical analysis of GBP/USD

Technical analysis is used to predict, as far as possible, the movements that the price of a given financial asset will undergo over a given period of time. To this end, both market dynamics and price history are studied and evaluated.

Thanks to these charts you will be able to see real-time forecasts for the GBP USD pair based on technical analysis.

GBP/USD Summary

  • GBP/USD is the second most traded currency pair on Forex and a pair where leverage is used quite frequently.
  • The hours of the New York trading session are the hours when trading in this pair normally takes place on the highest volume.
  • The GBP/USD price band is wider than those of other currency pairs.
  • Sterling is one of the easiest currencies to predict and its spread is often low.
  • This makes it an attractive currency for retail traders, offering respectable profit opportunities.

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