What Does the GBPUSD Pair Represent and What Affects Its Value?

The Pound-Dollar is one of the oldest currency pairs in the world.

GBPUSD is the ticker symbol for the Forex pair British Pound Sterling/United States Dollar, one of the major currency pairs as it’s one of the most traded in the world, it ranks as the 3rd most liquid currency pair; and it is included in the basket for the US dollar Index (USDX) as the 3rd most influential currency pair.

We cover the essentials about GBPUSD below.

GBP/USD

What Is GBPUSD?

A currency pair shows you how much of one currency is required to purchase one unit of another currency.

The first three letters of the quote represent the abbreviation of the base currency in this case GBP (Great Britain Pound), while the second shows the abbreviation of the terms currency USD (United States Dollar) also known as quote currency since the actual quote is given in this currency.

GBPUSD is often referred to as “The Cable”; the term comes from the early telegraph cables laid between London and New York that were used to communicate currency quotes and other data.

gbpusd foreign exchange currency represented with British Pound Sterling and United States Dollar in background with Baxia Markets

GBPUSD | How Is the Value Affected?

The GBP/USD is affected by factors that influence the value of the British pound and/or the U.S. dollar in relation to each other and other currencies. 

These factors are typically related to the economic indicators and actions by the central banks in both countries to increase or decrease their currency’s value such as the interest rate differential between the Bank of England and the Federal Reserve.

The pair tends to have a negative correlation with the USD/CHF and a positive correlation to the EUR/USD currency pairs. This is due to the positive correlation of the euro, Swiss franc, and the British pound.

How to Trade GBPUSD?

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