Any currency pair in which the Japanese yen participates is not recommended newbies to trade, but only experienced binary options investors. One of these pairs is the GBP/JPY. Despite the risks associated with trading this currency pair, the GBP/JPY is quite popular. The GBP/JPY leaves significantly behind the NZD/USD accounting for 10 percent of the trading turnover.
Being as popular as the USD/JPY, the GBP/JPY generally shows higher volatility.
The currencies belong to different economies; and this is the reason why large trading turnover is appropriate to the GBP/JPY.
The base currency in the pair is the British pound sterling. The quote of the GBP/JPY is two-digital, one pip is equal to 0.01.
How to Analyze the GBP/JPY
Analyzing the pound sterling, you need to have in mind that it’s affected by both the factors inside the United Kingdom and the Eurozone economy. However, the UK currency doesn’t show so strong reaction to the news from the EU as the euro.
The exchange rate of the Japanese yen is significantly impacted by the Bank of Japan’ policy and demand for Japanese consumer electronics.
A trader willing to deal with this instrument needs to check all news release marked in the economic calendar being able to influence the rate.
So, trading this instrument, you have to pay special attention only to those reports that have the most serious impact on the currency pair. However, news releases of minor importance can also influence the currency pair and hence are to be considered.
A trader needs to have in mind that the Bank of Japan fairly rare gives statements about planned interventions to depreciate the yen. This is also to be taken into account when you perform analysis. Depreciation ofthe Japanese yen is required to make the Japanese products more competitive on the world market. Japan is an export economy. Therefore, the exported volumes affect significantly the Japanese economy.
Trading this currency pair, quite a few traders use the strategy lying in opening orders or buying options only after the Bank of Japan interventions which typically make the GBP/JPY soar. A rate rise can exceed one hundred ticks. Along with this, the risk of losing is minimal.
The currency pair generally shows high volatility during all trading sessions. The European and UK news influence the pair during the European trading hours. During the Asian trading hours, news from Japan has the key role. During theAmerican trading hours, the exchange rate of the GBP/JPY can be affected significantly by change in import of the Japanese products to the United States and Canada. This includes import duties and quotes for the Japanese products.
The statements given by the Governor of the Bank of England fairly regularly can influence the rate of the pair. The British pound can be also affected by political events, natural disasters, calamities in the UK etc.
The Bank of Japan revises the key rate monthly. The Central Bank holds a press conference on the same basis and makes statements that can significantly affect the GBP/JPY. The unemployment rate in the country is updated regularly. Natural disasters, calamities, other negative events are among the factors influencing the national currency of Japan, that is, the yen.
Where to Make a Profit on GBP/JPY
To make money on currency pairs, I advise you to pay attention to binary options.
And to make a profit on a binary option, you just need to make a precise forecast of a direction that a price will take, that is, UP or DOWN.
I prefer to deal with AnyOption, the famous and time-tested broker. This world’s top binary option broker is well-known in Europe and the United States.
So, I browsed the broker’s website and chose GBP/JPY as an underlying asset. Today, there were important news releases in the UK. On the other hand, the stock exchanges in Japan were closed.
The Japanese yen is impacted by the U.S. dollar at this point of a day. However, there were no important news releases in the United States. Due to these factors, the trend in the GBP/JPY changed to bullish.
I set expiration of the binary option to 3:00 p.m., selected the investment amount and clicked the CALL button expecting the price to rise:
It was 2:26 p.m. at that moment meaning that I invested for a period of 34 minutes.
I knew if the price rose even by a pip in line with my forecast, I would get a 80 percent profit.
After a little while, I got the following result:
Anyone can generate a profit trading binary options on the GBP/JPY. By the way, along with binary options on currency pairs, AnyOption offers binary options on the world’s leading companies’ stock, indices, and commodities.