Home Business, Personal Finances, Money and Investing Tips

Home Business Small Business Art of Marketing Negotiating Skills Selling Tips Office Furniture Employment Credit Cards Forex Trading Personal Finances Money
 

What You Need to Know to
Trade the GBP/USD Currency Pair

4 economic reports that affect British pound trading

The GBP/USD is the third most traded currency pair, accounting for some 14% of total daily volume in the currency markets. The UK pound is one of the most popular currencies to trade, and is the oldest actively traded currency in the market. In addition, London is known as one of the major trading hubs of the global Forex market, which means that many beginning traders choose to focus on the GBP/USD currency pair due to its familiarity. In addition, the currency experiences sharp fluctuations in its value, which provides a lot of trading opportunities.

Most traded currencies
The British pound and the US dollar are amongst the top traded currency pairs, that account
for a considerable trading volume on the currencies market exchange.
 (Image by Pixabay.com)

When trading this currency pair, one of the most important things to consider is that the UK pound is mainly driven by fundamental factors. Thus, traders pay particular attention to the economic news coming out of Great Britain when making their trading decisions.

The specific economic reports that are seen to have the strongest effect on the pound include:

Inflation rate data

Countries that suffer from high prices see the value of their currencies erode. In addition, when a country suffers from high inflation, the central bank may choose to increase interest rates in order to deal with it. Inflation rates are calculated using consumer price index (CPI) data, which are released monthly by the Office of National Statistics. Traders also look at the Producer’s Price Index (PPI), which measures increases in the prices of raw materials.

Interest rates

As part of its mandate, the Bank of England, the UK central bank, is tasked to promote the stability of the pound, which it does by controlling inflation. The main way it does so is by changing the bank rate, or the interest rate that banks charge each other on balances that are held by the BOE.

Gross Domestic Product

The GDP measures the amount of goods and services produced by a country over a particular period and are released quarterly. It is important because it reflects the general level of its economic activity, which also impacts the strength of its currency.

Balance of Payments

This indicator records the international transactions a country has, with traders paying particular attention to the current account, which looks at the balance of trade as well as the flow of transfer and income payments. Trade balance figures are released monthly while BOP accounts are released quarterly.

   Forex Trading Tips and Advice
Affordable Trading Options
Affordable Trading Options
Beginner Forex Traders
Beginner Forex Traders
Best Days for Forex
Best Days for Forex Market
Binary Options Strategies
Binary Options Strategies
Donchian Channel Indicator
Donchian Channel Indicator
Forex is Not Gambling
Forex Is Not Gambling
Forex Market Explained
Forex Market Explained
Forex Tips for Newbies
Forex Tips for Newbies
Forex Trading as Business - Part 1
Forex Trading as Business - Part 1
Forex Trading as Business - Part 2
Forex Trading as Business - Part 2
Forex Trading Beginners
Forex Trading Beginners
Elliott Wave Principle
The Elliott Wave Principle
Fundamental Analysis
Fundamental Analysis
Head and Shoulders Pattern
Head and Shoulders Pattern
India Based Trading
India Based Trading
Main Approaches to Forex
Main Approaches to Forex
Moving Averages Trading
Moving Averages Trading
Picking a Forex Robot
Picking a Forex Robot
Safe Forex Trading
Safe Forex Trading
Scalping vs Position Trading
Scalping vs Position Trading
Trade GBP USD Pair
Trade GBP/USD Currency Pair
Trading Outside Comfort Zone
Trading Outside Your Comfort Zone
Understanding Correlations
Understanding Correlations
Using Forex Calendar
Using Forex Calendar
Zero Bound Interest Rate
Zero Bound Interest Rate