GBP/USD: The British Sterling (Pound) and The U.S Dollar
The GBP/USD currency cross (with the GBP as the base currency and the USD as the quote currency) is a major cross pairing two ‘reserve’ currencies. The Pound Sterling or the British Pound, nicknamed the cable and also nicknamed ‘quid,’ is the official currency of England and The United Kingdom, including The Falkland Islands, Gibraltar, The Isle of Man, Guernsey, and other territories.
Historically, the GBP gets its name from a Pound of Sterling Silver, back in the 700’s. Currently, according to reports, the GBP is the fourth most traded currency, comprising approximately11.9% of the daily forex market. In 1940, as part of the Bretton Woods system which established post world war two exchange rates, the Pound Sterling was pegged to the United States dollar.
The British Economy
3 of the biggest United Kingdom forex traders are Barclays Investment Bank, HSBC, and The Royal Bank of Scotland.
The United Kingdom or Britain boasts the 6th largest global economy with Nominal GDP of approximately $USD 2.85 Trillion (2014). The UK Economy is dominated by the Services Sector, comprising approximately 79% of the GDP.
Factors Affecting the GBP/USD currency pair
The highest level of trading the GBP/USD occurs during the British Open and the New York Open. Due to the fact that this highly liquid currency cross pairs two of the largest economies, and reserve currencies, multiple domestic and international economic factors come into play when considering the forex and trading this currency.
Fundamental economic indicators such as UK and US inflation, interest rates, recent QE / quantitative easing by both the Bank of England and the U.S. Federal Reserve, and rising / falling levels of employment have a direct result on price fluctuations. Rising and falling commodity prices also have a direct correlation.
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