Making Profits through GBP-USD trading

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Updated: 13.02.2020

Definition of GBP/USD

GBP stands for the British pound while USD stands for United State Dollar either cross or currency pair. Currency pair directs the trader on the number of U.S dollars that are required to buy a single GBP(British Pound). Using the British pound and the US dollar to trade is referred to as ‘Cable.

The GBP fell drastically back in the year 2007  when the big Recession happens, the exchange rates where 2.10 reducing under  1.40 losing more than 1/3 of its worth this resulted in investors and traders shifting to the United State Dollar. After more than five years that followed, the GBP got on its feet and traded on rates of 1.6/USD.

Back in the year 2016, the GBP/USD gradually fell during the time when the British against the Euro a go then over the next month the decline increased to 20%. This act of leaving the European Union crippled the economy of Britain as traders and investors shifted from Britain to other currencies.

How GBPUSD online trading works

During trading online, the forex trader has to show you the exchange rate of the currency pair you want to purchase for instance:

Currency symbol      bid rate                 ask rate

AUDNZD                   1.0234                   1.1111

GBPUSD                   1.3766                   1.3754

USDJPY                     106.223                 106.231

There is a bid and an asking rate for each currency pair. To time to time, that is why online traders are advised on updates of financial reviews daily. A single unit that is implemented to estimate GBPUSD is referred to as a pip. In case the price of the pip changes from 2.1 to 2.0 it called a single pip move.

GBPUSD  online trading is not an easy task. This is because one has to be proficient in this field estimating the right exchange rates.

In case you purchase when the asking rate is at 1.27373, then you sell at that same time without any change in the price, then you suffer a loss of 0.7 pips because eventually, at the 1.27366, you would have sold the pair. That is why there needs to be a rise of more than 0.7 pips in the forex market before deciding you want to end the bid rate at a gain.

At a case scenario where the bid price is the selling price of the investor while the asking price is his buying price, the following happens:

The investor purchase’s at an asking rate of 1.2737 while the GBPUSD changed to a bid of 1.2757 and an asking rate of 1.2758. This means that the investor can close at the price of the bid process making a profit of 20pips.

In a contrary case scenario where the exchange rate shifted from 1.273 to 1.271  and the GBPUSD ask rates are 1.2718 and that biding rates are 1.2737, the investor will suffer a loss of 20 pips.

 

While using GBP-USD, various factors that can affect the exchange rates, they include:

The economy of the two countries-Every time Britain’s or the US economy changes the rates of the currency pair will be affected too. If  Britains economy is good while the US economy is bad then the GBPUSD rates will increase.

  • Policy from the Bank of England- The bank’s committee holds a meeting monthly to analyze on financial reports. The report might increase or decrease the currency exchange rates.

GBP-USD online trading will bring a lot of earnings to an investor. If he implements the right strategies, he takes caution on different matters, then all he will have are profits.

The investor has to be persistent and assertive when making financial decisions.

Experience makes a trader proficient as time passes.