Getting to Know the GBP.

The GBP must be a pretty popular kid since it has a lot of cool nicknames.

Aside from being called the Sterling and the Pound, GBP pairs have awesome nicknames such as Cable (GBP/USD) and Guppy (GBP/JPY). Impressive, huh?

I like to bust a move…

GBP/USD is one of the most liquid currency pairs in the forex market. How come?

Remember, London has long been a major financial center in the world.

With major business transactions taking place every day, lots of moolah goes in and out of London.

Third Most Active Pair

Still, the GBPUSD only accounts for 14% of daily global trades, making it just the third most active pair traded.

This is probably the reason why spreads on the GBP/USD tend to be a pip or two more than that of the EUR/USD and the USD/JPY.

… and traders like me because I’ve got some nice curves.

With so many big-time corporations being based in London, there are many highly attractive investments to be found in the U.K. market.

Couple this with having some of the higher interest rates (usually) amongst the major currencies, investors may find British securities to be more attractive.

In order to get their hands on these assets, investors would first need to purchase some GBP.

I’m nimble during the London session…

GBP/USD trading volume is the highest during the European session, with potential for strong moves during the New York session when key U.K. and U.S. data is released.

The Asian session doesn’t normally provide much movement as European traders are still in bed while U.S. traders have just finished their day.

… but be careful ’cause I can get kinda rowdy!

The GBP pairs are very prone to volatile moves because of their lower level of liquidity compared to that of the EUR.

With liquidity growing thin at certain times in the market, the GBP can get caught in one direction, especially if there are large buy or sell orders in that direction.

Compared to other currency pairs, GBP pairs tend to react more strongly to surprise economic data releases.

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