When evaluating the most powerful forex trading pairs, there is no doubt that the USD/GBP pairing (also known as the ‘cable’) is arguably top the list. Linking the UK and US economy’s together, it links two affluent nations who are dealing with billions on a daily basis. It makes the pair an intriguing option and in many regards a safe bet due to its popularity alone. Anyone and everyone knows that currency trading is all about understanding the economic conditions in front of you. However, this may not always be as easy as it sounds. This guide looks at the USD/GBP currency pair and what you need to watch out for.
It is simple yet still of vital importance. Every forex currency pair has seasonal patterns, which should you learn them can definitely improve your forex trading success rate. Charts are the key to identifying this and something that you should pay great attention to. Seasonal patterns on a visual chart can give you an idea of how a currency pair tends to fair during the course of a year. Taking the USD/GBP pairing as an example, you will need to pay close attention to the seasonal pattern of the pound in order to determine its future. Remember, forex charts aren’t just for the hard core technical analysts out there; they are for everyone and play a key role in determining seasonal patterns. From one year to twenty years, you can identify the economic performance and seasonal pattern of a currency from looking at charts.
If you were to sit down and take a quick look at the GBP technical charts over the past ten years, a few key facts will become immediately clear.
· Dips occur in March, before a rise in April.
· May tends to be bearish.
· May tends to present the lowest dip of the year.
· Rises occur in the early days of both August and September
· October can be a mixed bag and is usually the most unpredictable month of the year.
It may be considered “cheating” in some circles, but it still stands as one of the best ways to avoid risk when trading the USD/GBP currency pair. When used correctly it allows you make small yet quick profits off of price movements. However, as with every pair your scalping strategy needs to change for USD/GBP. To get the best results set-up a chart that features 3 Exponential Moving Averages (EMAs) at its core, from there you can tweak it to your own personal preference. The EMAs will help you cover every angle of a potential forex trade, as it will display a crossover that gives you all the key facts.
The USD/GBP currency pair is undoubtedly the most popular, but that doesn’t make trading it any easier. The aforementioned has taken a look at how to trade the pair and what it is you should be both looking out for and implementing. Remember, the information here isn’t the be all and end all of USD/GBP currency pair trading, but it should definitely point you in the right direction.
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