GBP/USD CFDs TRADING
Currency Pair – Overview
The GBP/USD is one of the Major currency pairs and it is one of the oldest and most traded currency pairs in the entire world. Formed of the British pound (the base currency) and the U.S. dollar (the quote currency), this pair is also referred to as the ‘Cable’. This nickname term is used by forex traders and the story behind it goes back to the 1800s, when the exchange rate between the U.S. dollar and the British pound was transmitted across the Atlantic by a large cable that ran across the ocean floor between the United Kingdom and the United States.
The interest rate of the U.S dollar is set by the US’s central bank – the Federal Reserve. It is set and released eight times per year by the Federal Open Markets Committee (FOMC) and determines the value of America’s currency. More than that, interest rates set by the FOMC affect not only the value of the U.S. dollar and all the major currency pairs; but they also indicate whether the US economy is healthy or not.
On the other hand, in the United Kingdom, benchmark interest rate is set by the Monetary Policy Committee (MPC) and the Bank of England (BoE) official interest rate is known as the repo rate. The repo rate applies to open market operations of a group of counterparties.
How to trade the GBP/USD CFDs
This currency pair is widely-traded and the reason behind this is that it may offer a lot of trading opportunities. To get started, you need to open an account with a secure and reputable online forex broker that puts your needs above anything else. InvestFW is licensed and regulated broker by the Cyprus Securities and Exchange Commission (CySEC 298/16).
After the first deposit, there are just a few steps you need to follow in order to trade the ‘Cable’:
1. Check your leverage value, which has different ratios.
2. Select the trading tool (FX/CFD).
3. Select the GBP/USD currency pair and the trading volume you want.
4. Select the ‘Stop-Loss’ Order.
5. Opt for ‘SELL’ or ‘BUY’ to open a trading position.
6. Monitor the GBP/USD chart and exit the position when needed.
The trading platform, the tools, the charts, as well as the broker’s assistance are factors that may determine the outcome of your trade! InvestFW offers you the MT4 platform (Desktop, iOS, Android), the most popular and performant trading platform, which puts at your disposal a variety of 3 accont types, advanced adjustable charts that move in real-time, as well as the possibility of adding the desired extensions. More than that, we offer you two account types to choose from according to your level of experience; and a team of experts ready to guide you 24/5.
In addition to all of the above, the time of placing a trade on the GBP/USD currency pair is also important, even if the forex market is always active. Given the two currencies, the ideal time to trade the pair would be when the London and/or the New York Exchange sessions are open.
The factors that drive the GBP/USD currency pair
Unless you’re using the Sentiment Trading Strategy, you need to analyze and study the following factors:
1. The economic indicators of both countries: the interest rates, the monetary policy, the GDP, the employment change, the industrial production, the CPI, the inflation rate.
2. The diplomatic, political and social aspects of each country.
3. The international news.
These factors set or highly impact the value of the two currencies, can potentially determine the outcome of your trade. InvestFW gives you trading signals, a comprehensive education center, as well as delivers you all the latest news necessary for your trade!
Trading Strategies for the GBP/USD CFDs
There is no written recipe for success, or a trading strategy that will always work. Trading takes time, especially when it comes to the GBP/USD currency pair, which can have a very abrupt and vicious volatility. However, based on the numerous experiences, traders and experts developed certain strategies that might work if used correctly.
Here are a few of them:
• The Carry Trade Strategy: happens when a trader sells a currency with a relatively low interest rate, while purchasing a higher-yielding one, in order to potentially benefit from the difference in interest rates.
• The Fundamental Analysis: implies entering a trading position based on the major economic releases and other events from and related to the two countries.
• The Chart Monitoring: implies the constant monitoring of the pair on various charts, be it spread or other types of calculations, in order to find the best buying and selling opportunities.
• The Sentiment Analysis: happens when the trader simply takes a decision based on ones feelings and intuition.
Trading the GBP/USD currency pair can be difficult, but also interesting due to the market’s volatility when done correctly! If you choose the right online broker, the right trading strategy and stay updated on the way these currencies move – you can create many trading opportunities. Trade with InvestFW and you’ll be halfway there. Your trading opportunities start with us!