we have to understand the uniqueness of the GBP/USD currency pair. GBP/USD is the symbol of Bristish pound and United States dollar currency pair. The currency quote indicates what quantity of money is necessary to pay so as to buy one pound.
It’s a well known trading instrument in Europe and, especially, in the United Kingdom. It stands third on the list of the biggest currency pairs worldwide, daily volume averages 12 percent of the overall Forex market turnover. This currency pair is absolutely unpredictable and has huge volatility. Its fluctuations ar short and unstable. Owing to such behavior within the forex industry, it was referred to as Cable.
Daily fluctuations of the currency pair reach a 130 pips on the average. Low liquidity of this currency couple is noticed solely within the Asian region (average movement is about thirty pips). That’s why novice traders are advised not to begin trading on the Cable.
Several traders prefer EUR/USD to the GBP/USD. As a rule, Cable moves within the same direction as EUR/USD, however not always.
Pound-dollar movement can be totally different from identical euro-dollar movement within the same period once economic news is released from UK. For instance, country Government changes Interest rates through the Bank of England. Pound movements are similar to the movements of the euro and Swiss franc. One must always watch out trading with pound as a result of any surprise it may bring at a point. Pound usually moves against the news; even once everything appears favorable for the currency, its rate will slip.
Several traders select this pair for swap trading as a result of a considerable distinction in interest rates of pound and dollar.