GBP/USD Great British Pound / United States Dollar

GBP/USD is a forex pair comprising of the Great British pound and the US dollar. It tells you the current exchange rate of USD into GBP – or how many dollars you’d need to buy a single pound.

The pair is nicknamed ‘Cable’, as a submarine cable under the Atlantic Ocean was used to transmit the current exchange rate for the pair. Today it is one of the four top-traded FX pairs on the markets, alongside EUR/USD, USD/JPY, and AUD/USD.

GBP/USD is one of the oldest FX pairs, first quoted back in 1866. It tends to trade with a positive correlation to EUR/USD.

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Interesting facts

GBP/USD, also known by its nickname cable, represents the amount of USD that can be purchased with one British pound. GBP was pegged to the US dollar in 1940 and became part of the Bretton Woods system which governed post-war exchange rates, and with the collapse of the system the pound became free-floating in 1971. Historically, the pound and the US dollar have been the main tool by which many other nations have valued their currencies.

Price drivers

The British pound is influenced by numerous factors, both domestic and international. Domestically, GBP is affected by economic indicators which provide an insight into the health of the UK economy, including interest rates and quantitative easing (both determined by the Bank of England), GDP growth, inflation and labor market data. Furthermore, the British pound can be affected by the prices of some base metals, oil and other commodities.

USD can be influenced by labor market data – in particular non-farm payroll (NFP) results and the level of unemployment – US GDP and inflation data, interest rates and the Fed.

Pivot Points

  • Pivot Point
  • Distance

    Distance

    Distance shows the difference between the pivot point and bid rate. It is calculated by subtracting the ask rate from the pivot point rate.

  • Bid
  • Ask

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Understanding Pivot Points

Pivot points are used by traders as a predictive indicator and denote levels of technical significance. When used in conjunction with other technical indicators such as support and resistance or Fibonacci, pivot points can...Read More
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