Forex tips for trading the GBP/USD
Cable trading strategy from EagleFX
The United Kingdom boasts one of the largest economies in the world. As a result, the British pound, or GBP, is one of the most actively traded of all global currencies.
There actually has never been a better time for trading the GBP/USD pair, as tensions, changes, and central bank activities leading to a larger number of profit opportunities.
This popular currency pair can be traded within the EagleFX trading platform, along with many other pairs. Below, we'll provide some advice on trading this active pair.
What Drives GBP/USD Price Action?
With the United Kingdom being such a large nation, there are actually quite a number of factors that impact the values of the GBP/USD pair. A few of these factors include global demand for the pound, central bank policies, and geopolitical tensions.
Look to the following fundamental and economic indicators when looking for opportunities to trade on the GBP/USD pair:
State of the Associated Economies
When the economy of a country is thriving, there will be an increase in demand for its currency. Whenever there is a tip in the balance, say the United States economy is thriving while the United Kingdom economy is struggling, you're likely to see the impact of this imbalance reflected in the value of the two associated currencies.
Bank of England Policies
The United Kingdom's central bank holds an official meeting once per month, at which they release the latest Bank of England Monetary Policy Summary report. This report outlines all of the reasons as to why members of the central bank have made the decision to either reduce interest rates, boost interest rates, or make no change to the rates at all.
Often, a currency will decrease in value whenever a rate cut seems like or takes place. Rising interest rates tend to do the opposite, sending the currency value higher.
Politics and Elections
Political events such as Brexit can trigger huge price movements in a currency. Government elections, especially key elections such as the United States presidential election, can also have a huge impact on the GBP/USD pair.
Watch for other government-related changes to impact currency values as well, such as changes to tariffs or laws that impact the exchanging of goods.
While each of the aforementioned events can impact long-term price trends within the market, there are smaller, lesser known economic data announcements that have an impact on the price of these currencies over the short-term.
Look to retail sales data, inflation reports, employment figures, and other similar reports when seeking optimal points of market entry.
When to Trade the GBP/USD Pair
When is the best time to trade this pair? When the market is active, or volatile, and price action is strong. As the market processes information and changes such as that listed above, you'll see the currency rates changing.
The vast majority of price movement will occur during the major market sessions. Outside of market hours, you can expect values to calm and become much steadier.
The EagleFX platform provides trading opportunities on standard assets 24-hours a day, 5-days a week, while cryptocurrencies can be traded on 24/7.
Feeling inspired and ready to start trading the GBP/USD pair? You'll be happy to know that EagleFX allows traders to get started with as little as $10 and provides leverage up to 1:500.
Open an account today and receive fee-free deposits and withdrawals, access to around the clock live customer support, and incredibly low spreads. Remember, the GBP/USD is just one of over two-hundred assets that are available within EagleFX's MetaTrader 4 platform.
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This article was submitted by EagleFX.