GBP / USD is one of the most popular currency pairs on the Forex market and Admirals provides a comprehensive guide on how to successfully trade GBP / USD。In this article, we will put together a guide to trading GBP / USD in Admirals for beginners。

GBP / USD is the third most popular currency pair in the foreign exchange market after EUR / USD and USD / JPY, and there are many reasons for its popularity。First, the UK is the fifth largest economy in the world, while the US is the largest; on top of that, there is a lot of liquidity and volatility in the currency pair, making it fairly easy for traders to enter and exit the market; and finally, it is relatively easy to obtain information about these two countries compared to other countries such as Norway or Brazil。

In the money market, GBP / USD is often referred to as "cable," a term derived from the first transatlantic cable for communications laid from the United States to Britain in 1858.。Currency quotes are some of the types of information transmitted through the system, so since then, the exchange rate between the British pound and the US dollar has been called "cable"。

GBP / USD Trading History

The GBP / USD currency pair has a long and rich history, trade between the two currencies has been going on for a long time, and there is no way to know any relative value of the original pound other than the USD exchange rate.。

The history of GBP / USD mainly began after the gold standard。The modern GBP / USD exchange rate didn't really start until the early 1970s, when both the US and UK switched to floating rates.。Admiral Markets pointed out that the exchange rate of the pound and many other currencies was closely related to the value of gold before the 1970s, as part of the Bretton Woods Agreement of 1944.。

Fast forward to 2016 and we have the Brexit referendum。As can be seen from historical data, the referendum left a huge impact on the value of the pound。The Brexit vote sent the pound to its lowest point in 30 years of forex history, the weakest it has been against the dollar since 1985.。The main difference is that one is mainly because the pound is weaker and the other is mainly because the dollar is stronger。

Another historical moment known as the "pound flash crash" occurred at the end of 2016, during which the pound fell 6% against the dollar in just a few minutes.。Although the exact cause remains controversial, such an event is enough to shake the currency market for a while。

The main conclusion of GBP / USD history is that it is impossible to predict what will happen to the currency pair, and despite high market liquidity, it is still full of uncertainty。Therefore, every GBP / USD trader needs to be prepared for everything and learn how to properly manage trading risk。

How the GBP / USD exchange rate works

When trading GBP / USD, the pound is the base currency and the dollar is the quote currency, and the quote for the currency pair basically shows the number of dollars required to buy a pound。Therefore, assume that the price of GBP / USD is 1.2400, if you want to buy GBP / USD, then you need 1.$24 to buy £1; but if you want to sell £/ $, then for every £1 you will receive 1.24 USD。

The unit of measurement in forex trading is called a point and its value is 0 of the quote.0001。Therefore, if the price from 1.24587 Change to 1.24,597, which means 1 point change。Now, the difference between the bid / ask price is called the spread, which is part of the transaction cost, and the larger the spread, the higher the cost。

Best time to trade GBP / USD

Timing is very important when trading GBP / USD。Many traders believe that the best time to trade GBP / USD is during the opening of the main trading session, although you can trade GBP / USD 24 hours a day, 5 days a week。According to Admiral Markets, the following are the main market periods for GBP / USD trading:

• London Open Time (07: 00 London Time): Volume will start to pick up during this period as market participants digest the events of the end of the US and Asian markets。So you see the momentum starting to pick up at this point, also coinciding with the opening of the European market。Major breakthroughs usually occur during this time。
  New York Open Time (07: 00 New York Time): The market is busiest during this period and is therefore often seen as the best time to trade liquid currency pairs such as GBP / USD。Crossover is usually associated with the continuation of the trend observed in the European session。

Volatility is usually high during the early hours of the European and US trading sessions, as most economic data that may affect prices is released at that time; at the same time, the Asian session is usually less volatile。

Factors Affecting GBP / USD

In order to successfully trade GBP / USD, the most important thing is to understand the two economies and the factors that may affect the exchange rate。Without this knowledge, you will not be able to make the right trading decisions. Here are the key fundamentals and economic indicators to consider:

• UK and US economies: international money demand usually flows to strong growth economies。Therefore, when the UK economy looks strong and the US economy is weak, it may cause the GBP / USD exchange rate to rise, and vice versa。
  Bank of England (BoE) policy: The Bank of England meets every month to release the Bank of England's monetary policy summary report, which highlights the reasons for the bank's decision to cut, raise or maintain interest rates。Normally, currencies fall after a rate cut, and vice versa。
  Political events: Political events such as the Brexit referendum or government elections can cause large currency swings, so traders need to keep up to date with the latest political and economic news from both countries。
  Economic data: In addition to the above factors, there are some smaller economic data that may affect the GBP / USD exchange rate in the short term, mainly including economic announcements such as retail sales, inflation, and employment data。

How to trade GBP / USD

There are countless ways you can trade GBP / USD。For example, many short-term traders like to trade day-to-day around high-impact news releases, trying to capture the volatility after the news release.。At the same time, long-term traders tend to track news announcements that may affect GBP / USD to identify potential trading trends.。

In addition, GBP / USD is one of the best currency pairs to trade using technical analysis, mainly due to the high correlation between the two currencies。The process involves looking at historical price movements and identifying patterns to determine what is likely to happen in the future, and most technical traders use technical indicators to help them make informed decisions and spot confirmation signals on their charts.。

One of the tools you can use to trade GBP / USD is Admiral Markets' MetaTrader, the Extreme Edition plugin, which can provide you with instant information about the bullish / bearish of currency pairs on multiple time frames and indicators。

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Admiral Markets is a Forex and CFD brokerage firm,Since 2001, it has been committed to providing smart financial solutions for global traders.。The main services revolve around three key activities: learning, trade and investment。To this end, it has a number of registered subsidiaries, including Admiral Markets UK Ltd, Admiral Markets Pty Ltd (Australia), Admiral Markets AS Jordan Ltd, Admiral Markets Cyprus Ltd, Admirals SA (Pty) Ltd (South Africa) and Aglobe Investments Ltd (Seychelles), for global markets。