What is GBP/USD in forex?
GBP/USD is the currency pair that represents the value of the British Pound in relation to the US Dollar.
GBP/USD is a currency pair that is traded in the foreign exchange market, and it represents the relative value of the British pound (GBP) against the US dollar (USD). The exchange rate of GBP/USD tells you how many US dollars you need to buy one British pound, or how many British pounds you can get in exchange for one US dollar. This currency pair is widely followed by forex traders, as it represents two of the largest economies in the world.
The value of the British Pound versus the US Dollar is represented by the symbol GBP/USD.
Currency pairs are typically quoted using currency symbols for the two currencies involved. For example, the currency pair GBP/USD is quoted as “GBP/USD” or “GBPUSD”. The first currency in the pair, the base currency, is listed first, followed by the second currency, the quote or counter currency.
The exchange rate for the GBP/USD pair is usually expressed as a decimal number, with four decimal places. For example, if the exchange rate is 1.2550, that means it will cost you $1.2550 US dollars to buy one British pound.
Example: GBP/USD 1.2550
In the example above, the counter currency rate displays how many US dollars are required to buy one British Pound. So if the price today is quoted at GBP/USD 1.2550, it means you will pay $1.2550 for one British Pound.
GBP/USD is one of the most liquid, and most traded currency pairs in the FX market, accounting for 11% of overall volume.
Cable
The GBP/USD currency pair is often referred to as the cable (or cable).
The phrase “cable” is a slang term for the pound-to-dollar exchange rate used by forex traders. When the exchange rate between the US Dollar and the British Pound began to be sent over the Atlantic through an underwater communications cable in the mid-nineteenth century, the term was formed and it continues to be used today.
Other British Pound Currency Crosses
Currency crosses are currencies that do not include the US dollar.
The most popular British Pound currency crosses are the British Pound versus the Japanese Yen (GBP/JPY) and the Euro versus the British Pound (EUR/GBP).
The British Pound versus the Japanese Yen (GBP/JPY) is one of the most volatile currency pairs in the FX market. This is because the Japanese Yen has a low yield, whereas the British Pound has a high yield.
Other British pound crosses include:
- GBP/AUD (British Pound/Australian Dollar)
- GBP/NZD (British Pound/New Zealand Dollar)
- GBP/CHF (British Pound/ Swiss Franc)
- GBP/NOK (British Pound/ Norwegian Krone)
