Trading GBP/USD Pair

The Foreign Exchange is considered to be the most lucrative market among all financial markets in the world. Its flexibility and high liquidity make it an ideal choice for both beginner and experienced investors. Forex remains one of the most inspired investment solutions in 2019 and a mandatory addition to the portfolio of any trader.

The GBP/USD currency pair – Overview

Often referred to as the Cable, because of the first successful exchange rate between the two currencies that was made through a submarine communications cable – the GBP/USD is part of the Majors category and it is one of the oldest currency pairs in the Forex market. The pairing tells the trader how many U.S. dollars (the Quote currency) are needed to purchase one British pound (the base currency) and its value is quoted as 1 British pound per X U.S. dollars.

The benchmark interest rate of the British pound is established by the Monetary Policy Committee (MPC) and the Bank of England (BoE) official interest rate is known as the repo rate. This type of rate is typically applied to keep inflation under control, as well as when the BoE lends capital to commercial banks when they experience a shortfall of funds. On the other hand, the interest rate of the American currency is decided by the Federal Open Markets Committee (FOMC), eight times per year; while the amount of U.S. dollars in circulation is controlled by America’s central bank – the Federal Reserve (FED).

How to trade the GBP/USD currency pair effectively

The Cable is one of the most traded currency pairs in the world, accounting for 9.2% of the market’s total daily trade volume. This fact alone proves that it can be a profitable choice at all times. In order to reach the best results when trading the GBP/USD, here are the main things you need to consider:

1. Trade according to your level of experience

Whether you’re a newbie or an experienced investor, all the decisions you make need to be based on your level of experience. Starting from the account type you choose to the strategy you decide to approach, be realistic and don’t jump ahead by missing important steps. TradeLTD welcomes all investors and offers you 5 account types designed to help you trade the GBP/USD currency pair in the most effective way, no matter the experience you have with the Forex market; as well as a Personal Account Manager to assist you along the way.

2. Study the factors that influence the GBP/USD currency pair

You’ve probably heard this before, but in Forex, knowledge is power! Understanding what factors influence the value of the two currencies and using them to your advantage is one of the keys to successful trading. Some of the main economic factors that affect the pair are the British Consortium shop price index (BRC), Retail Sales, Bank of England MPC minutes, the FOMC scheduled meetings, the non-farm payrolls, as well as the Gross Domestic Product (GDP) and the Consumer Price Index (CPI) of both countries. It goes without saying that such a volatile pair is very sensitive to news, Brexit-related events being a solid example. Try to make a thorough analysis of these factors & more before entering a trade.

3. Plan ahead

The Foreign Exchange is an overwhelming financial market where prices fluctuate constantly. By trading according to a well-crafted plan will help you minimize the risks and maximize your chances of gaining profits. Make sure to incorporate a strategy that suits your trading style and is also suitable for the characteristics of the GBP/USD currency pair.

4. Trade when the GBP/USD currency pair is the most active

The Forex market boasts with great accesibility and a flexible schedule, being open 24 hours a day, 5 days a week. However, the prime hours to trade the GBP/USD pair are during the London and New York sessions (07:00 GMT – 17:00 GMT). Newsworthy volatility generally starts from 4:30 AM – 3.30 AM, or at the opening of the New York session.

5. Trade with leverage

This pair contains two of the most influential currencies on a global level, which makes it very attractive to investors. When you trade with leverage, the GBP/USD currency pair can bring you outstanding returns, even if you invest a small amount of money. At TradeLTD, we offer you the opportunity to trade with a margin of 1:100 – 1:200 and a spread that goes as low as 0.9 pips (VIP account).

6. Be aware of the risks

Forex is an exciting market with high rewards, but it involves a substantial amount of risk, as well. Make sure to research and study the market, trade the GBP/USD with a demo account and backtest your strategies. Moreover, never miss the opportunity to cut your losses by setting Stop Loss, Take Profit or any other orders.

Why trade the GBP/USD with TradeLTD

Behind TradeLTD is a team of experienced traders, passionate about the Forex market. We know what it takes to be a great trader and it all begins with the broker you choose. With our stellar educational center that includes video courses, articles, webinars and many more – we will help you grow as an investor and reach the best results when trading the GBP/USD currency pair. Our services were designed with your needs in our mind. Creating a secure and comprehensive trading environment for you will always be our top priority.