Trading Forex (EUR/GBP) – Wiki Payments

The market for foreign exchange (Forex) is an active one where many currency pairs are exchanged every day. Notably, EUR/GBP is one of the most common currency pairs.

The euro is the official currency of most European countries including Germany, Spain, Italy, France, etc.

Conversely, the United Kingdom’s official currency is the GPBB (Pound Sterling). Both EUR and GBP currencies have higher individual prices than the USD (United States Dollar). If the EUR/GBP is to be sold, here are tips that might benefit you.

Understanding the foundation and quote currency

There’s always a foundation and quote currency when it comes to trading forex pairs. The pair is the result of a price comparison between the base currency and the quote currency, which shows the amount of the quote currency required to purchase the base currency.

In the case of the EUR/GBP, the EUR is the base currency in the first place, while the GBP is the quoted currency in the second place.

So when it comes to trading EUR/GBP, we are looking at how much GBP is required to purchase EUR. You are selling GBP to buy EUR, in other words.

In addition, two values are involved, which include the offering price and the asking price. The bid price is the amount of the quoted currency for the acquisition of the base currency, while the asking price corresponds to the amount of the quoted currency obtained after the sale of the base currency.

Consider their low volatility

Volatility has to do with how rapidly or slowly trading rates change. Considering the great number of currencies involved, the forex market is volatile. The EUR/GBP pair, however has low volatility; their prices do not very often change significantly.

As previously mentioned, both the EUR and the GBP are among the world’s strongest currencies. European countries use the Euro while the UK uses the Pound Sterling; thus the EUR/GBP is a relatively stable currency pair, which makes them heavily traded. In the forex market and beyond it, a big shift in their prices will attract immense publicity.

Follow closely on economic news

It is ideal to monitor the economic news when trading any currency pair through forex brokerage houses, so you don’t miss any event that could drive a big price shift. This also refers to the EUR/GBP currency pair; EU countries and the UK are interested in addition.

Significant changes, including new monetary policies, capital input, capital withdrawals, inflation, etc, should not be skipped. Notably, both currencies’ short-term rates are affected by reports of economic data.

You should therefore search for economic updates on the GBP and EUR regularly in the morning and evening. In addition, since they can affect investor choices, it is ideal to review political news.

Timing is key

Trading activity on the forex market typically hits a peak in major financial cities around the world at certain times. Forex trading is thus differentiated into three operation sessions: sessions in North America (New York), Europe (London), and Asia (Tokyo). Notably, the London European Forex session begins from 7 am to 4 pm (GMT).

While you can trade in the 24/7 forex market at any time, during the European Forex session, it is ideal to trade the EUR/GBP pair; an easy way to note this is do not trade when it is dark in London.”

Trends are important, lookout for it!

It is important to recognise ongoing patterns if you want to conduct a profitable EUR/GBP trade. You can either use the EUR/GBP price analysis or a technical trend predictor for the EUR/GBP pair.

Take for example, the Simple Moving Average of the 200-Day Period; if the chart is trending down and prices are shifting below the moving average, it is a bearish pattern. You can only obey short signals from the EUR/GBP pair to avoid having false trend signals.

Similarly, it is an upward trend if the chart is trending up and prices are shifting above the moving average. You can only obey the pair’s long signals to avoid having incorrect pattern signals.

Research on the pair’s correlation

You should still look out for other forex pairs and how they correlate, though you have your sights fixed on EUR and GBP. You should ideally search for parallels from the past three months.

Pairs with a good correlation are likely to have EUR or GBP; EUR/JPY and GBP/JPY, for example.

You can get trading signals for the EUR/GBP pair using correlation. Similarly, currencies are perfect for hedging with clear correlations.

Keep this in mind!

Trading on Forex is a significant way to make money on the internet, whereas trading on the EUR/GBP pair is a lucrative one.

Forex trading is, however as often cautioned, risky; there is no guarantee of returns or profits. You can then bring in just what you can afford to lose.