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GREAT BRITAIN POUND / UNITED STATES DOLLAR Trading
The British pound and the U.S dollar currency pair still remain one of the most widely-traded currency pairs in the world. Traders use the vernacular term “trading the cable” to refer to an exchange between this popular currency pair. The word “cable” may also refer to the exchange rate between the pound and the dollar or simply refer to the British pound.
History of GBP USD Trading
For most of the 1800s, right up until the First World War, £1 was valued at a small fraction under $5. The Britain pound was the biggest currency globally, with over 60% of global debt being held in sterling, pre-WW1. The US dollar caught up in the early 1920s, and by 1944, with the conception of the Bretton-Woods monetary system, the pound to dollar exchange rate was pegged at £1:$4.03. In 1971, the Britain pound became a free-floating currency as the Bretton-Woods system failed. Simultaneously the US dollar became free-floating, and the US decided to drop the gold standard.
As a general rule of thumb, since the pound was allowed to free-float against the dollar, the nominal value of the Britain pound depreciated over time, allowing people to believe that the pound was slowly weakening. Research by Dr Mike Staunton Prof. Paul Marsh and Prof. Elroy Dimson, of the London Business School, suggests that, since World War 2, the GBP/USD pairing has remained effectively level in real terms.
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GBP/USD Trading FAQs
When Is the Best Time to Trade GBP/USD?
When Is the Best Time to Trade GBP/USD?
While forex pairs can theoretically be traded 24 hours a day, there are optimum times to trade the GBP/USD whenever the currency pair is more volatile. From 06:00 and 16:00 (GMT) the GBP/USD is usually busy (GMT).
Why Is the GBP/USD Currency Pair Significant to Traders?
Why Is the GBP/USD Currency
Pair Significant to Traders?
The GBP/USD pair is one of the most liquid currency pairs in the Foreign Exchange industry. Due to its narrow bid-ask spreads, volatility and volume, still remain popular. The GBP/USD is one of the most cash-rich currency pairs available and the 3rd most traded major currency pair in the world.
What affects GBP/USD investing?
What affects GBP/USD investing?
A range of factors that can affect the GBP/USD pair including GDP, employment, interest rates, inflation rates, and political shifts within the domestic economy. Additionally, Brexit, Britain’s relationship with the EU, monetary policy and communications from both central banks can also play a major role in the currency pair value. The UK’s Bank of England reviews the interest rate every month, while the US Federal Reserve reviews rates eight times a year.
Where Can I Find a Trusted Forex Broker to Trade GBP/USD?
Where Can I Find a Trusted
Forex Broker to Trade GBP/USD?
As you may already know, trading via CFDs (contracts for difference) is one of the most popular approaches when dealing with currencies such as GBP and USD. While there are numerous Forex brokers out there. Try to find one that suits your needs. Such as FP Markets, a fully regulated broker that offers all types of platforms and accounts, to suit every need.