The official currency of the United Kingdom and the world's oldest currency still in use. The pound sterling is the fourth most traded currency in forex and is known for its volatility and sensitivity to domestic politics.
The Pound in Forex
The British pound (ISO 4217 code: GBP), often called sterling or "Cable" (GBP/USD), traces its origins back over 1,200 years, making it the oldest currency still in active use. GBP/USD is the third most traded forex pair, and the pound accounts for approximately 13% of global forex turnover.
What Drives the Pound
The Bank of England (BoE) sets UK monetary policy, and its interest rate decisions, Monetary Policy Committee (MPC) votes, and Inflation Reports are primary GBP drivers. The UK economy is heavily service-oriented, making services PMI data particularly impactful.
The pound has historically been sensitive to political events. Brexit caused GBP/USD to drop from 1.50 to below 1.20, and UK political uncertainty continues to generate GBP volatility. The pound is also affected by the UK's persistent Current Account deficit.
Trading GBP
The pound tends to be more volatile than the Euro (EUR) or U.S. Dollar (USD), offering wider daily ranges. It is most actively traded during the London session. GBP crosses like GBP/JPY are known for large intraday swings that attract active traders.
Related Terms
U.S. Dollar (USD)
The official currency of the United States and the world's primary reserve currency. The USD is involved in approximately 88% of all forex transactions and serves as the benchmark against which all other currencies are measured.
Bank of England
The central bank of the United Kingdom, responsible for setting monetary policy through the Monetary Policy Committee (MPC) and managing the British pound sterling (GBP).
Major Pair
A currency pair that includes the US dollar and one of the other most traded currencies. The seven majors are EUR/USD, GBP/USD, USD/JPY, USD/CHF, AUD/USD, USD/CAD, and NZD/USD.
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