Despite the fact that binary option trading involves some risk, it is a good source of primary or additional income. The convenience of this work is that you know how much you earn or lose from the outset. This makes you confident and enables you to do several trades at a time. Finally, you don’t risk missing currency rate fluctuations.
The currency pair GBP/USD is one of the most popular among experienced traders.
It takes a 12% share in the turnover of the currency market, that’s quite a good result.
All binary options brokers offer to invest and make a profit from GBP/USD. To yield a profit, you need to forecast a price – namely, whether the price will rise or fall during a particular period of time, for example, in the next 15 minutes.
How much the price moves upward or downward doesn’t matter. If it moves, you are in profit. The most important point is that the market movements must be in line with your forecast.
The Basics of GBP/USD
The GBP/USD currency pair shows the price of pound sterling in relation to the U.S. currency, or, in other words, how many dollars you need to buy pound sterling.
The GBP/USD currency pair gained its popularity due to high volatility assuming strong sharp price fluctuations throughout the day.
Many experts claim that GBP/USD and EUR/USD tend to move in a similar way. To some extent, they are right. However, due to different factors that influence these currency pairs, their movements can also vary greatly.
Exactly the high volatility makes this currency pair attractive and liquid.
After you learn the aspects described below, you can easily yield a profit from GBP/USD.
How to generate a profit from GBP/USD
The price of pound sterling is affected by economic and political news both in the UK and Europe Union. Therefore, a trader has to assess not only the British, but European news as well. Thus, the same news reports can influence euro and pound sterling.
The following UK indicators having an impact on this currency pair should be considered:
- 1. The Bank of England interest rate decision. This economic indicator is released on the first or second Thursday of each month.
- 2. Retail sales. The report is also released monthly.
- 3. At the end of the month you should also pay attention to the country’s GDP. If it increases, the price of the currency rises.
- 4. The Bank of England inflation report. It’s published quarterly. Inflation rise pushes down the price of pound sterling leading to downward movement of the currency pair.
- 5. An average unemployment rate. This is a monthly report. The rise of the indicator is a negative factor.
- 6. The Bank of England Governor’s statement. You need to consider the projections made in the statement and follow ups. Growth of the positive factors enables a trader to yield on the currency pair rise and, vice versa, negative factors growth or drop of the positive ones lead to decrease of the pound sterling price. The Governor can make statements pretty often; therefore, it’s important to follow the events in the economic calendar and news.
- 7. Assess political situation in the country. This factor is also of great importance to forecast accurately.
- 8. Accidents, disasters, shutdowns etc. are of great significance as well.
The U.S. factors for all currency pairs where USD is present are practically similar:
- 1. Interest rate decision is taken and announced 8 times every calendar year.
- 2. Minutes for each FOMC (Federal Open Market Committee) meeting is published at the same time.
- 3. Unemployment claims. This is a negative factor as it shows population employment. Increase in the number of claims leads to decrease of the U.S. dollar and, consequently, to rise of GBP/USD.
- 4. Other economic and political news.
Technical analysis as well as fundamental analysis is of considerable significance for all currency pairs. You can analyze the price line using various indicators, patterns, trend etc., figure out further price direction and yield on GBP/USD solely on the basis of technical analysis (THE TYPES OF CHARTS IN THE TECHNICAL ANALYSIS)
It should be noted that the GBP/USD market is the most active through the European and U.S. trading hours. The peak falls on the period when trading hours overlap.
The most stable quiet time is during the Asian trading hours.
Where to make a profit from GBP/USD
If you want to trade GBP/USD, you can do it virtually with any broker. I usually deal with AnyOption: