The pound-yen and pound-dollar currencies fluctuate greatly, so the market is prone to volatility. We will explain the risks of FX trading. When trading with pound currency pairs on XMTrading, you need to be careful. Compared to other currency pairs, pound pairs tend to fluctuate more violently, and even small movements can often result in large losses. In order to avoid large losses, you will need to set the lot size lower when trading with pounds. We will explain the reasons for changing your phone number. If you have not contacted us, even if your number has changed, you must contact us. You can easily change your account by tapping on Kiwami, Standard, or Demo. We accept applications even on holidays, depending on the situation, so please process your application as soon as possible.
What are the characteristics and price movements of the pound?
The British currency, the pound, was once used as a key currency like the current US dollar when Britain was the world’s number one economy and military power, but now it is used as a reserve currency like the US dollar. It is the fourth largest trading volume in the world after Japan.
The pound has less liquidity than the euro or yen, so its price movements tend to be more volatile than those currencies. This has been influenced by the weaker yen in Japan, and the pound yen tends to be more volatile than the pound dollar or the pound Australian dollar. This is important because it moves the most in financial exchange, so there is a high risk of losing money. Be careful of falling or rising prices.
high volatility
The pound is characterized by high volatility. High volatility is an advantage because you can aim for big profits, but you need to be careful because it also increases the risk if it goes in the opposite direction. Investors need to understand whether they are buying or selling before trading. There is also the possibility that prices will skyrocket as a result of interest rate hikes. This is especially dangerous before policy interest rates.
As you can see from the vertical axis, the pound has a very large fluctuation range, so if you do it with the same sense as other currency pairs, there is a high possibility that you will lose a lot.
bank monetary policy
The sterling currency is controlled by the Bank of England (BOE), the central bank of the United Kingdom.
After the Monetary Policy Committee, which decides monetary policy, the BOE releases the minutes at the same time in addition to the usual announcement of results. In addition, quarterly inflation reports are also published at the same time.
Correlation with Euro
The pound is geographically close to the Eurozone and has deep political and economic ties with it, making it one of the currencies with a strong correlation to the euro. As you can see with knowledge and information, the two currencies tend to move in tandem, so they often move in the same direction. The UK is leaving the EU, but the point is that many British people still have their assets in the euro even after the withdrawal. When the euro rises, the pound also rises.
Active after European time
As the pound is the currency of the United Kingdom, like the euro, its price movements are sluggish during Tokyo time, and trading tends to be active after European time.
For short-term trading such as day trading, it may be more efficient to trade mainly after European time.
Points to note when trading the pound
As mentioned above, the pound is characterized by very high volatility compared to other currency pairs. Therefore, one wrong step can cost you a lot of money.
keep the lot down
The pound is more volatile than the euro and the US dollar. Try to trade with as few lots as possible.
Drop positions during economic indicators
The pound is more volatile than the euro and the US dollar. When it comes to economic indicators, there is a big movement, so if there is a possibility of making a big profit, there is also a possibility of a big loss. It is better not to do it during economic indicators as much as possible.
get used to price movements
If you want to trade in pounds first, practice trading. The pound is very volatile and dangerous. Until you get used to it, do not increase the lot and trade small.
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