Trading GBP/USD presents its own set of challenges.This is because, the pair is prone to sharp price movements and chaotic price actions. Well, this is what most speculators love. When you get into the right wave direction you'll be rewarded quick and huge.
The UK economy is the second largest national economy in the Europe after Germany. The pound is heavily influenced by cross border trade and mergers and acquisitions activity between UK and continental Europe. Two-thirds of UK foreign trade is conducted with EU members states, making the EUR/GBP cross one of the most important trade-driven cross rates.
GBP/USD moves is similar to EURUSD. However, GBP/USD price movement exhibits more abrupt volatility and more overall extreme overall price movement. For example, if better than expected data released, GBP/USD price movements would double EUR/USD price movements.
3 points to take note on trading GBP/USD:
- Price actions tends to see one-way traffic in highly directional markets.
- False breaks of technical levels occur frequently.
- Spike reversal are very common.
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