The Euro and the Great British Pound are two of the world's most widely utilised financial currencies, thus this is a red-hot pair in global financial markets. Due to high demand, trade volume for this currency pair remains sturdy throughout the year, resulting in plenty of liquidity and opportunity for traders.
The EUR/GBP has a very tight spread, making it an attractive option for scalpers and day traders. The pair's aforementioned liquidity also makes it possible to enter and exit positions quickly, without having to worry too much about slippage. Additionally, the news-driven nature of the pair provides ample opportunity for price action traders to capitalise on the news events that shape our world.
With 19 Eurozone member nations adopting the Euro as their currency, and one of the worlds most powerful economies using the Pound Sterling, there is no shortage of news events that have a direct impact on EUR/GBP...forget about a slow news day!
The EUR/GBP is made up of the United Kingdom and the European Union, the two biggest players in continental Europe. In comparison to other FX pairs, the EUR/GBP has proven to be relatively steady and consistent, primarily due to free flows of capital and significant trade between the parties. As the two economies are so interlinked, there are a diverse range of factors that can influence the pricing of this currency pair. The main things to keep an eye on are Interest Rates, Trade Surplus/Deficits, Inflation, Employment Levels, Political Announcements, and overall consumer confidence.
The key bodies that influence the EURGBP trading pair include:
The European Central Bank (ECB)
This is the institution responsible for setting the monetary policy across the Eurozone. Economic measures taken by the ECB can directly impact the value of the Euro. Let's say for example the ECB decides to raise rates, this might make European investment more attractive, and can lead to a strengthening of the currency.
Bank of England (BOE)
The same is true for the BOE which sets the monetary policy for the UK. Watch out for interest rates, and monetary measures taken by the BOE. It should be noted that the BOE has earned a pretty solid reputation amongst its other central bank counterparts!
Look out for political headlines - there never seems to be a dull moment in UK politics. Take Brexit for example, consider the impact that this move had/continues to have on the demand and strength of the GBP.
UK office of national statistics
Wage growth, employment, and other key economic data is released by this office. A lot of this information is price sensitive, so closely monitor these announcements and pick out risks and opportunities accordingly.
The Pound Sterling (GBP) is the fourth most common currency in circulation, behind only the USD, the EUR and the JPY. It is also the third most traded currency, accounting for approximately 13% of daily trade volume in currency markets. The GBP is one of the most stable currencies in the world. It displays a relatively low degree of volatility, and a high degree of strength sitting 5th on the list of strongest currencies.
The Pound is considered a safe haven currency, which means it has the tendency to rise in value during periods of economic or geopolitical instability. It is widely used as a reserve currency around the world due to its stability and liquidity.
Coming to the scene in 1999, the Euro is the second most traded currency in the following trailing only the USD. The EUR is the official currency of 19/27 European Union member nations and serves as a safeguard against exchange rate volatility for EU companies, promoting economic development and trade in the area.
The EUR is not as stable as the GBP, with a higher degree of volatility. The main drivers of EUR price movement are interest rates set by the ECB, inflation levels in the Eurozone and economic data releases.
The Euro to British pound sterling exchange rate is represented by the symbol EURGBP. The pair depicts Europe's major economies (the United Kingdom and the European Union), which are significantly interconnected. The EUR is the base rate of the pair, meaning that it is what traders quote against the GBP. EUR/GBP is a highly liquid market, and is very popular amongst scalpers and swing traders alike.
The closeness of the two economies has resulted in a relatively steady and less jittery price action for the EURGBP pair over time. On the other side, major political and economic events have always resulted in significant price fluctuations for the pair.
EUR/GBP is available for trading 24/5, however the pair is generally at its busiest between 06:00 and 16:00 (GMT).
When you are buying EUR/GBP, you are of the opinion that the price of the EUR will strengthen against the GBP. The reverse is true for a Sell trade.
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