The The EUR/GBP pair is a popular forex currency objection In the market because of the strength of the British and European economy. Also called hempThe pair offers huge opportunities for both day and concentrated traders.
In this article, we’ll look at what the EURGBP is and then identify some of the most important catalysts.
What is the EUR/GBP pair?
EUR/GBP is a forex pair composed of the Euro and the British Pound. It is a common pair because The role played by the United Kingdom and the European Union In the market. In most cases, it is One of the best traded companies forex the palace in the industry.
in this pair, The euro is the basis British currency The pound is the quote currency. Therefore, if the price of EUR/GBP is trading at 0.860, this means that 1 Euro is equivalent to 86 British Pounds.
EUR to GBP Husband he is Highly liquid Because of the large volume of trade located between the United Kingdom and the European Union.
In 2020, more than 80% of all UK trade volume was with European countries such as Germany and France. The chart below shows the flow of trade between the two places in years.
Historical performance of EUR/GBP
The performance of the EUR/GBP pair has been mixed over the years. It rose to 0.9566 in December 2008. Its all-time low was 0.6248, which it reached in 2002.
Some of its biggest moves occurred in 2008-2009 during the global financial crisis and in 2016 after the Brexit vote. Between 2018 and 2022the husband was in A narrow range.
Unique characteristics of EUR/GBP
Like other forex pairs, the shonell has several Special features. First, she is known to have some Big swings. This fluctuation is caused by Huge amount of news and economic data located between the European Union and the United Kingdom.
Secondly, currency pairs The nickname is Chenille. This name comes because of the canal that was built between the United Kingdom and France. Its length is 37 km, which makes it the longest marine tunnel in the world.
Third , EUR/GBP Husband It existed even when the United Kingdom was in the European Union. Like Sweden, the United Kingdom thought having its own separate currency was a good thing. With its currency, the Bank of England can take action in different macro environments.
Moreover, the EUR/GBP rate is closely correlated with other currency pairs for which the Euro is the base currency. As shown below, it has a relationship with EUR/AUD and EUR/CHF.
What drives EUR/GBP?
There are several main things that move the EUR/GBP. In this list, we will focus only on the most important ones, which can be useful even to those who are approaching this pair for the first time.
European Central Bank and Bank of England
The European Central Bank and Bank of England They are two of the most famous central banks in the world. They meet eight times a year and make important announcements. These banks are charged with maintaining a stable rate of inflation and unemployment.
To do this, the two Central banks meet eight times a year And adjust interest rates when needed. Like the Federal Reserve, they also implement quantitative easing and tighten when necessary.
These actions, along with the rhetoric of the two banks’ officials, tend to affect EUR/GBP.
UK and EU reaction to many geopolitical events in the area. It was the most important event Britain’s exit from the European Unionwhich occurred in 2016. It saw the UK exit from the European Union, of which it had been a member for decades.
It was the second largest economy in the bloc after Germany, with a GDP of over $3.5 billion. Since 2016, relations between the European Union and the United Kingdom have often been tense.
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Sometimes, the political drama between the United Kingdom and European countries tends to affect the EUR/GBP currency pair. For example, after Brexit, there were often tensions between the UK and the EU over the Northern Ireland Protocol.
Like all foreign currency pairs, it is most often EUR/GBP affected by economic data Between the two countries. Some of the most important economic data that move a currency pair are inflationAnd the retailAnd the Industrial Produce, Careersand consumer confidence.
In most cases, data from the UK tends to have more weight on the pair.
The European Union and the United Kingdom have a great trading relationship. The The United Kingdom sells most of its goods to European Union countries.
As such, any trade turmoil and trade figures tend to have an impact on the pair.
EUR/GBP Trading Strategies
There are many trading strategies for trading the EUR/GBP pair. these strategies The same The ones people use To trade other currency pairs Such as EUR/USD and GBP/AUD. Some of these strategies are:
- Pairs trading This is an approach to trading two currency pairs that are closely related or inversely related. In this case, you can trade EUR/GBP with EUR/CHF and EUR/SEK.
- Scalping This strategy involves using a short-term chart such as the 1-minute chart to trade the pair. The goal is to open many trades and make a small profit on each one.
- Algorithmic trading – This is a strategy for using robots or expert advisors to trade EUR/GBP.
- swing trading This approach involves making an analysis and identifying short-term trends or reversals and holding them for a few days.
- trend following – This strategy involves buying or selling the EUR/GBP pair when there is an existing trend.
EUR/GBP Frequently Asked Questions
When is the best time to trade EUR/GBP?
The best time to trade EUR/GBP is during the European session. That’s when the UK and EU publish most of their economic data.
What is the future of EUR/GBP?
The couple’s future performance will be affected by how much the UK and EU experience growth in the next few years. The impact of Brexit will also have a role to play in this.
What are the risk management strategies when trading EUR/GBP?
Some of the most important risk management strategies to use when trading EUR/GBP are: Stop loss and take profit And make sure that you are using a small lot size and leverage.
Useful external sources
- Tips on how to trade the EUR/GBP currency pair – FxEmpire