GBP/USD trading

What is GBP/USD, and why is it called cable?

GBP/USD is the price of one British pound in US dollars. A quote of 1.2700 means one pound costs 1.2700 dollars. Traders call it cable, a nickname from the 19th century, when the rate was passed between London and New York through a transatlantic telegraph cable.

It is one of the major pairs, though it trades with larger daily ranges than EUR/USD. Buying cable means you expect the pound to gain on the dollar.

What moves GBP/USD?

The Bank of England is the main UK driver. Its Monetary Policy Committee votes on rates, and the split of that vote often matters as much as the decision. A close vote or a change in tone about future cuts or hikes can move the pound within seconds.

UK inflation, wage growth and monthly GDP feed those expectations. Because the UK imports a lot of goods and relies heavily on services, the pound also reacts to global risk mood, and to fiscal news such as budgets and government borrowing plans that affect gilt yields.

On the other side of the pair sits the Federal Reserve. A strong US jobs report that lifts dollar yields can push cable down even when UK data is steady.

When is cable most active?

Cable is most active during the London session, and it is often at its busiest from the London open through the New York overlap. UK data releases at 07:00 London time are a regular source of early moves.

Traders sometimes see sharp spikes at the London open and in the minutes after UK data. Late in the New York afternoon, volume fades and spreads can widen. Check the market hours page to line up your plan with the sessions.

How does a pip work on GBP/USD?

GBP/USD is quoted to four decimals, so a pip is 0.0001. Dollars are the quote currency, so a standard lot of 100,000 pounds is worth $10 per pip. The price of cable is higher than EUR/USD, but the pip value is the same.

What are the risks of trading cable?

Cable is quick. A normal day can range well over 100 pips, and event days run wider. A stop-loss that suits EUR/USD may be too tight here and get hit by ordinary noise.

Gaps and slippage appear around the Bank of England decision and the weekly open. Leverage magnifies all of it, and losses can exceed your deposit. Size the position from the stop distance and the money you are willing to lose, not the other way round. The position size calculator does that arithmetic.

Which events matter for GBP/USD?

Add these to your plan using the economic calendar.

How do traders approach cable?

Cable is known for sharp intraday swings and for trending when UK news is clear. Breakout traders watch the London open range. Others fade extremes after a spike once the first reaction fades. Neither method is reliable, so test it on a demo account.

Wider daily ranges mean wider stops, and wider stops mean smaller lots for the same money at risk. If you accept a $50 loss and your stop is 50 pips away, each pip can be worth $1, which is one mini lot.

Cable is also correlated with EUR/USD, since both are priced against the dollar. Holding both in the same direction doubles your dollar exposure. The pound has its own story, though, so the two pairs can split on days when UK news dominates.

Why does UK politics move the pound?

Political events change the outlook for UK growth, trade and government finances, and the pound reacts quickly. Elections, budget plans and debates about public borrowing have all produced large moves in the past.

Since political news arrives with little warning, it is a reason to keep stops in place and positions modest, especially when a vote or a budget is due.

How do you trade GBP/USD as a CFD with AQ Markets?

A GBP/USD CFD tracks the pair's price, so you can go long or short without exchanging pounds. Find it in our forex CFD range on MetaTrader 4 and 5. Always read the spread, swap and margin details in the platform specification before placing an order.

Pick the account that fits your size from account types, then practise the pair's wide swings on a demo account before using real money.