GBP/USD

Type: Currency | Group: Majors | Base: Sterling | Quote: US Dollar | Spread: 1.2 –  4.5 pips

About GBP/USD

The euro U.S. dollar (EUR USD) is a currency pairing whereby the euro and the U.S. dollar can be traded against each other. The EUR USD can be thought of as the euro versus the U.S. dollar. The EUR USD currency pair is highly liquid and at the top of the most traded currency pairs. The EUR USD may also be written as EUR/USD.

The EUR USD currency pair is one of the more interesting trades in forex. Any currency pair featuring the euro is interesting because it pits one nation’s economic outlook against the eurozone nations. In the case of the EUR USD, it becomes even more compelling because between the two currencies, a large portion of the global economy is covered. For that reason, the European Central Bank (ECB) and the Federal Reserve are carefully watched and their actions are seen as setting the trend on the global stage.

GBP/USD Important Levels

Higher Zone: 1.1662 – 1.1669 | Lower Zone: 1.1616 – 1.1624

About Poundsterling

The euro made its debut on January 1, 1999. It originally functioned as a reserve currency for all of Europe as the various nations took their time phasing out their national currencies. Some member nations still have a national currency in addition to accepting the euro, but even these are pegged to the euro.

For the first few years of trading, the euro was very stable and appreciated against many older currencies. The difficulties of coordinating a single currency over a network of very different countries caught up to the euro in 2010, as a Greek sovereign debt crisis drew attention to the very different political and fiscal natures of the member nations. The Greek debt crisis and similar problems in other member nations lead to the euro becoming a much more volatile currency.

The European Central Bank (ECB) coordinates with the central banks of the member nations through the European System of Central Banks (ESCB) to make decision affecting the euro and the member nations (known as the Eurozone). Taken collectively, the Eurozone is larger than the U.S. economy.

About US Dollar

The USD is integral to world trade in that it belongs to the world’s largest economy and acts as the world reserve currency. Because of this unique situation, many of the standard economic rules do not seem to apply to the USD.

The U.S. government has had long periods of fiscal irresponsibility and yet the USD has not always suffered during inflationary times that would damage any other currency. This is because, as the world’s largest economy, the USD is considered a safe haven currency in times of global uncertainty. However, this rule doesn’t always hold, and the U.S. dollar does eventually pay for periods of prolonged inflation and trade deficits – it just seems to enjoy a much longer lag before any market reaction takes place.