Wednesday, October 17, 2012

Lesson06- undestanding GBP/USD

GBP and USD currency trading

The GBP/USD rate is comprised of the British Pound Sterling as the 'base' currency, and the US dollar as the 'counter' or 'quote' currency.The GBP/USD exchange rate is actually a comparison of the value of one currency in relation to the other. For example, the quotation GBP/USD 1.45 means that one British Pound Sterling is exchanged for 1.45 US dollar. If the forex rate increased to 1.50, this would reflect a strengthening British Pound Sterling as compared with the US dollar. You would buy, if you expected that the British Pound Sterling would continue to strengthen against the US dollar.

As trading occurs on currency comparison, it is easy to trade GBP/USD in any economic environment. GBP/USD forex trading is favoured as a way to reduce portfolio risk as it provides the ability to profit in rising and falling markets.

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