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Trading GBP/USD

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Written By
Jemma Grist
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Written By
Jemma Grist
Jemma is a writer, editor and fact-checker focused on retail trading and investing. Jemma brings a unique perspective to the forex, stock, and cryptocurrency markets and works across several investment websites as a researcher and broker analyst.
» Jemma Grist Profile Page
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Edited By
Tobias Robinson
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Edited By
Tobias Robinson
Tobias is a partner at DayTrading.com, director of a UK limited company and active trader. He has over 25 years of experience in the financial industry and contributed via CySec to the regulatory response to digital options and CFD trading in Europe. Toby’s expertise and dedication to financial education make him a trusted voice in the industry, including a BBC investigation into digital options.
» Tobias Robinson Profile Page
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Fact Checked By
William Berg
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Fact Checked By
William Berg
William contributes to several investment websites, leveraging his experience as a consultant for IPOs in the Nordic market and background providing localization for forex trading software. William has worked as a writer and fact-checker for a long row of financial publications.
» William Berg Profile Page
Updated
Jul 24, 2024

The British pound/US dollar pair is one of the most liquid currency trades in the forex space. Tight bid-ask spreads, volume and volatility, all ensure the day trading popularity of GBP/USD. This page will break down everything you need to know about investing, from the history of the GBP/USD pair to its benefits and risks. Strategies will also be offered, including technical analysis and trading hours. We’ve listed the best GBP/USD brokers below.

GBP/USD Trading Brokers

Click a broker for details
  1. 1
    FOREX.com
    Active Trader Program With A 15% Reduction In Costs
    Ratings
    4.9 / 5
    4 / 5
    4.3 / 5
    4.6 / 5
    4.6 / 5
    4.3 / 5
    4.8 / 5
    4.5 / 5
    3.6 / 5
    3.8 / 5
    $100
    0.01 Lots
    1:50
    NFA, CFTC
    Forex, Stocks, Futures, Futures Options
    MT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
    Wire Transfer, Credit Card, Debit Card, Visa, Mastercard, Skrill, Neteller, ACH Transfer
    USD, EUR, GBP, CAD, AUD, JPY, CHF, PLN
    Go To FOREX.com
  2. 2
    NinjaTrader
    Ratings
    4.3 / 5
    2.8 / 5
    2.9 / 5
    4.3 / 5
    4.5 / 5
    4 / 5
    4 / 5
    4 / 5
    3 / 5
    3.2 / 5
    $0
    0.01 Lots
    1:50
    NFA, CFTC
    Forex, Stocks, Options, Commodities, Futures, Crypto
    NinjaTrader Desktop, Web & Mobile, eSignal
    ACH Transfer, Debit Card, Wire Transfer, Cheque
    USD
    Go To NinjaTrader
  3. 3
    Interactive Brokers
    Ratings
    4.5 / 5
    3.5 / 5
    4.6 / 5
    4.3 / 5
    3.3 / 5
    3 / 5
    4.4 / 5
    4.3 / 5
    4.3 / 5
    4.5 / 5
    $0
    $100
    1:50
    FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM
    Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
    Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral
    Cheque, ACH Transfer, Wire Transfer, Automated Customer Account Transfer Service, TransferWise, Debit Card
    USD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF
    Go To Interactive Brokers
  4. 4
    OANDA US
    CFDs are not available to residents in the United States.
    Ratings
    4.5 / 5
    3.5 / 5
    2.8 / 5
    4 / 5
    4.5 / 5
    3.5 / 5
    4.3 / 5
    3.8 / 5
    4.7 / 5
    3.7 / 5
    $0
    0.01 Lots
    1:50
    NFA, CFTC
    Forex, Crypto with Paxos (Cryptocurrencies are offered through Paxos. Paxos is a separate legal entity from OANDA)
    OANDA Trade, MT4, TradingView, AutoChartist
    Wire Transfer, Visa, Mastercard, Debit Card, ACH Transfer
    USD, EUR, GBP, CAD, AUD, JPY, CHF, HKD, SGD
    Go To OANDA US
  5. 5
    Videforex
    20% to 200% Deposit Bonus
    Ratings
    2.5 / 5
    3 / 5
    3.5 / 5
    3.3 / 5
    3.5 / 5
    4.5 / 5
    1.3 / 5
    1.3 / 5
    4.1 / 5
    4.4 / 5
    $250
    $0.01
    1:500
    Binary Options, CFDs, Forex, Indices, Commodities, Crypto
    TradingView
    Skrill, Perfect Money, Bitcoin Payments, Neteller, Credit Card, Visa, Mastercard, Ethereum Payments
    USD, EUR, GBP, AUD, RUB
    Go To Videforex
  6. 6
    RedMars
    Ratings
    3.3 / 5
    3.5 / 5
    3.8 / 5
    3.5 / 5
    3.8 / 5
    4 / 5
    2.8 / 5
    3 / 5
    4.7 / 5
    4.6 / 5
    €250
    0.01 Lots
    1:30 (Retail), 1:500 (Pro)
    CySEC, AFM
    CFDs, Forex, Stocks, Indices, Commodities, Cryptos
    MT5
    Credit Card, Wire Transfer, Debit Card, Sticpay, FasaPay, Bitcoin Payments, Trustly, PayPal, Skrill, Neteller, Klarna, Mastercard, Visa
    USD, EUR
    Go To RedMars
  7. 7
    BinaryCent
    20% - 200% deposit bonus
    Ratings
    2.8 / 5
    2.8 / 5
    3 / 5
    2.5 / 5
    3 / 5
    3 / 5
    1 / 5
    2 / 5
    3 / 5
    3 / 5
    $250
    $0.01
    1:500
    VFSC
    CFDs, Forex, Stocks, Cryptos, Options, Commodities
    Own
    Visa, Mastercard, Debit Card, Credit Card, Skrill, WebMoney, Neteller, Bitcoin Payments, Wire Transfer, Perfect Money, Ethereum Payments
    USD
    Go To BinaryCent
  8. 8
    InstaTrade
    Ratings
    2.5 / 5
    3 / 5
    3 / 5
    3 / 5
    3.5 / 5
    3.5 / 5
    3.5 / 5
    3.3 / 5
    4.8 / 5
    4.4 / 5
    $1
    0.01
    1:1000
    BVI FSC
    FISP, CFDs, Forex, Stocks, Indices, Commodities, Cryptos, Futures
    InstaTrade Gear, MT4
    Visa, Mastercard, Wire Transfer, Credit Card, Debit Card, Bitcoin Payments, Ethereum Payments
    USD, EUR, RUB
    Go To InstaTrade
  9. 9
    UnitedPips
    40% Deposit Bonus
    Ratings
    2 / 5
    3.5 / 5
    3 / 5
    3.8 / 5
    3.5 / 5
    3.5 / 5
    2.8 / 5
    2.5 / 5
    0 / 5
    0 / 5
    $10
    0.01 Lots
    1:1000
    IFSA
    CFDs, Forex, Precious Metals, Crypto
    UniTrader
    PayPal, Credit Card, Debit Card, Perfect Money, Bitcoin Payments, Ethereum Payments
    USD
    Go To UnitedPips
  10. 10
    World Forex
    100% Deposit Bonus
    Ratings
    2.5 / 5
    3.3 / 5
    3 / 5
    2.8 / 5
    3.5 / 5
    3.3 / 5
    2.5 / 5
    2.8 / 5
    1.3 / 5
    1.3 / 5
    $1
    0.01 Lots
    1:1000
    SVGFSA
    Forex, CFD Stocks, Metals, Energies, Cryptos, Digital Contracts
    MT4, MT5
    Wire Transfer, Debit Card, Credit Card, Visa, Mastercard, Google Wallet, Apple Pay, Perfect Money, Bitcoin Payments, Volet
    USD, EUR, RUB
    Go To World Forex

This is why we think these brokers are the best in this category:

  1. FOREX.com - FOREX.com continues to uphold its stature as a premier FX broker, offering over 80 currency pairs and boasting some of the most competitive fees in the industry. With EUR/USD spreads dipping as low as 0.0 and $5 commission per $100k, it stands out. Moreover, its SMART Signals help to identify price behaviors across numerous major currency markets.
  2. NinjaTrader - NinjaTraders supports the trading of popular currencies including the EUR/USD. The software also offers advanced features to streamline the trading experience, including complex order types like market if touched (MIT) and one cancels other (OCO).
  3. Interactive Brokers - IBKR presents an extensive range of over 100 major, minor, and exotic forex pairs, surpassing the offerings of nearly all leading alternatives, though not CMC Markets. Forex trading occurs over multiple platforms and boasts institutional-grade spreads starting from 0.1 pips and 20 complex order types, including brackets, scale, and one-cancels-all (OCA) orders.
  4. OANDA US - OANDA offers a diverse selection of 68 currency pairs, more than many alternatives. The broker’s in-house platform offers superb day trading capabilities via powerful TradingView charts, including 65+ technical indicators and 11 customizable chart types.
  5. Videforex - Videforex offers trading on 35 currency pairs through leveraged CFDs with spreads from 0.1 pips. Alternatively, traders can use binaries to speculate on upward/downward price movements with payouts up to 98%. Integrated technical analysis, economic calendars, and market news, all available within the platform, help support FX trading decisions.
  6. RedMars - RedMars strongest investment category is forex with more than 50 currency pairs, from majors to minors and exotics. Spreads start from 0.0 pips, catering to active currency traders, and leverage can reach 1:500. However, there are no forex heatmaps or research tools to support aspiring forex traders.
  7. BinaryCent - Trade 24 forex pairs via binary options. Such a small range of currency pairs is not that unusual among binary options brokers, and BinaryCent's high payouts up to 95% compensate for the lack of range.
  8. InstaTrade - InstaTrade offers a huge selection of around 100 currency pairs. It provides spreads starting at 0.0 on majors, plus integrated forex analysis in the web platform, featuring signals, plus technical and fundamental summaries. Additionally, InstaTrade offers educational modules covering forex basics for beginners, including margin trading and risk management.
  9. UnitedPips - UnitedPips supports trading on over 40 major, minor and exotic currency pairs. To help inform trading decisions, it offers daily market analysis with fundamental and technical insights into prominent currency pairs like AUD/USD and EUR/USD.
  10. World Forex - World Forex offers CFD and digital contract trading on 53 forex pairs, including EUR/USD and GBP/EUR. High leverage is available for CFDs, which can be accessed with competitive spreads on certain account types.

Trading GBP/USD Comparison

Trading GBP/USD Comparison
Broker Forex Assets EUR/USD Spread Forex App Rating Minimum Deposit Regulator
FOREX.com logo
80+ 1.2 4.9 / 5 $100 NFA, CFTC
NinjaTrader logo
50+ 1.3 3.5 / 5 $0 NFA, CFTC
Interactive Brokers logo
100+ 0.08-0.20 bps x trade value 4.3 / 5 $0 FCA, SEC, FINRA, CFTC, CBI, CIRO, SFC, MAS, MNB, FINMA, AFM
OANDA US logo
65+ 1.6 4 / 5 $0 NFA, CFTC
Videforex logo
35+ 0.1 2.5 / 5 $250 -
RedMars logo
50+ 0.7 4.7 / 5 €250 CySEC, AFM
BinaryCent logo
25+ Floating - $250 VFSC
InstaTrade logo
65 0.0 - $1 BVI FSC
UnitedPips logo
40+ 0.7 - $10 IFSA
World Forex logo
53 From 0.6 - $1 SVGFSA

FOREX.com

"FOREX.com remains a best-in-class brokerage for active forex traders of all experience levels, with over 80 currency pairs, tight spreads from 0.0 pips and low commissions. The powerful charting platforms collectively offer over 100 technical indicators, as well as extensive research tools."

Christian Harris, Reviewer

FOREX.com Quick Facts

Bonus OfferActive Trader Program With A 15% Reduction In Costs
GBPUSD Spread1.3
EURUSD Spread1.2
EURGBP Spread1.4
Total Assets80+
Leverage1:50
PlatformsMT4, MT5, TradingView, eSignal, AutoChartist, TradingCentral
Account CurrenciesUSD, EUR, GBP, CAD, AUD, JPY, CHF, PLN

Pros

  • With over 20 years of experience, excellent regulatory oversight, and multiple accolades including runner-up in our 'Best Forex Broker' awards, FOREX.com boasts a global reputation as a trusted brokerage.
  • Alongside a choice of leading platforms, FOREX.com offers a superb suite of supplementary tools including Trading Central research, SMART Signals pattern scanner, trading signals, and strategy builders.
  • The in-house Web Trader continues to shine as one of the best-designed platforms for aspiring day traders with a slick design and over 80 technical indicators for market analysis.

Cons

  • Funding options are limited compared to leading alternatives like IC Markets and don’t include many popular e-wallets, notably UnionPay and POLi.
  • Demo accounts are frustratingly time-limited to 90 days, which doesn’t give you enough time to test day trading strategies effectively.
  • Despite increasing its range of instruments, FOREX.com's product portfolio is still limited to forex and CFDs, so there are no options to invest in real stocks, real ETFs or real cryptocurrencies.
Visit FOREX.com
FOREX.com Review

NinjaTrader

"NinjaTrader continues to meet the demands of active futures traders looking for low fees and premium analysis tools. The platform hosts top-rate charting features including hundreds of indicators and 10+ chart types."

Tobias Robinson, Reviewer

NinjaTrader Quick Facts

GBPUSD Spread1.6
EURUSD Spread1.3
EURGBP Spread1.6
Total Assets50+
Leverage1:50
PlatformsNinjaTrader Desktop, Web & Mobile, eSignal
Account CurrenciesUSD

Pros

  • NinjaTrader is a widely respected and award-winning futures broker and is heavily authorized by the NFA and CFTC
  • Traders can get free platform access and trade simulation capabilities in the unlimited demo
  • NinjaTrader continues to deliver comprehensive charting software for active day traders with bespoke technical indicators and widgets

Cons

  • There is a withdrawal fee on some funding methods
  • Non forex and futures trading requires signing up with partner brokers
  • The premium platform tools come with an extra charge
Visit NinjaTrader
NinjaTrader Review

Interactive Brokers

"Interactive Brokers is one of the best brokers for advanced day traders, providing powerful charting platforms, real-time data, and customizable layouts, notably through the new IBKR Desktop application. Its superb pricing and advanced order options also make it highly attractive for day traders, while its diverse range of equities is still among the best in the industry."

Christian Harris, Reviewer

Interactive Brokers Quick Facts

GBPUSD Spread0.08-0.20 bps x trade value
EURUSD Spread0.08-0.20 bps x trade value
EURGBP Spread0.08-0.20 bps x trade value
Total Assets100+
Leverage1:50
PlatformsTrader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, TradingView, eSignal, TradingCentral
Account CurrenciesUSD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF

Pros

  • With low commissions, tight spreads and a transparent fee structure, IBKR delivers a cost-effective environment for short-term traders.
  • There's a vast library of free or paid third-party research subscriptions catering to all types of traders, plus you can enjoy commission reimbursements from IBKR if you subscribe to Toggle AI.
  • The new IBKR Desktop platform takes the best of TWS while adding bespoke tools like Option Lattice and Screeners with MultiSort to create a genuinely impressive trading experience for day traders at every level.

Cons

  • IBKR provides a wide range of research tools, but their distribution across trading platforms and the web-based 'Account Management' page lacks consistency, leading to a confusing user experience.
  • Support can be slow and frustrating based on tests, so you might find it challenging to reach customer service representatives promptly or encounter delays in resolving issues.
  • TWS’s learning curve is steep, and beginners may find it challenging to navigate the platform and understand all the features. Plus500's web platform is much better suited to new traders.
Visit Interactive Brokers
Interactive Brokers Review

OANDA US

"OANDA remains an excellent broker for US day traders seeking a user-friendly platform with premium analysis tools and a straightforward joining process. OANDA is also heavily regulated with a very high trust score."

Jemma Grist, Reviewer

OANDA US Quick Facts

GBPUSD Spread3.4
EURUSD Spread1.6
EURGBP Spread1.7
Total Assets65+
Leverage1:50
PlatformsOANDA Trade, MT4, TradingView, AutoChartist
Account CurrenciesUSD, EUR, GBP, CAD, AUD, JPY, CHF, HKD, SGD

Pros

  • The broker offers a transparent pricing structure with no hidden charges
  • The broker's API facilitates access to 25 years of deep historical data and rates from 200+ currencies
  • Day traders can enjoy fast and reliable order execution

Cons

  • There's only a small range of payment methods available, with no e-wallets supported
  • The range of day trading markets is limited to forex and cryptos only
  • It's a shame that customer support is not available on weekends
Visit OANDA US
OANDA US Review

Videforex

"Videforex will serve traders looking for a no-frills, easy-to-use platform to speculate on the direction of popular financial markets through binaries. With a sign-up process that takes a matter of minutes and a web-accessible platform, getting started is a breeze. "

William Berg, Reviewer

Videforex Quick Facts

Bonus Offer20% to 200% Deposit Bonus
GBPUSD Spread0.1
EURUSD Spread0.1
EURGBP Spread0.1
Total Assets35+
Leverage1:500
PlatformsTradingView
Account CurrenciesUSD, EUR, GBP, AUD, RUB

Pros

  • Videforex is one of the few brokers with 24/7 multilingual video support, providing comprehensive assistance for active traders.
  • Videforex regularly runs trading contests, offering practice opportunities and cash prizes to beginners and experienced traders, with position sizes from just ¢0.01.
  • Traders can earn up to 98% payouts on 100+ assets with the broker’s binary options, bringing it in line with competitors like IQCent.

Cons

  • The absence of any educational tools is a serious drawback for newer traders who can find blogs, videos and live trading sessions at category leaders.
  • The client terminal needs improvements based on our latest tests, sporting sometimes slow and unresponsive widgets which could dampen the experience for day traders.
  • Videforex lacks authorization from a trusted regulator, meaning traders may receive little to zero safeguards like segregated client accounts.
Visit Videforex
Videforex Review

RedMars

"RedMars is the best fit for experienced day traders familiar with the MetaTrader 5 platform and based in the EU, where the broker is authorized by the CySEC. However, the threadbare education and research tools make it unsuitable for beginners."

Christian Harris, Reviewer

RedMars Quick Facts

GBPUSD Spread0.7
EURUSD Spread0.7
EURGBP Spread1.1
Total Assets50+
Leverage1:30 (Retail), 1:500 (Pro)
PlatformsMT5
Account CurrenciesUSD, EUR

Pros

  • The broker supports a range of flexible payment methods, including wire transfers, credit cards, e-wallets, and notably cryptocurrencies
  • The broker is one of a limited number of firms to offer an account specially designed for VIPs with premium support and invites to exclusive events
  • Getting started on RedMars is incredibly easy - you can be up and running in just a few minutes based on tests

Cons

  • The no-frills trading environment offers little beyond the basics, with no Islamic account, PAMM account or copy trading.
  • RedMars falls short for newer traders, with little in the way of education, no beginner-friendly platform, a steep minimum deposit, and inadequate support during testing
  • While RedMars' spreads are within industry averages, they don't offer a significant edge over the cheapest day trading brokers we've personally used, notably IC Markets
Visit RedMars
RedMars Review

BinaryCent

"Traders who want a reliable binary options broker with a streamlined platform and high payouts should try out BinaryCent."

Tobias Robinson, Reviewer

BinaryCent Quick Facts

Bonus Offer20% - 200% deposit bonus
GBPUSD SpreadFloating
EURUSD SpreadFloating
EURGBP SpreadFloating
Total Assets25+
Leverage1:500
PlatformsOwn
Account CurrenciesUSD

Pros

  • Accepts a wide range of funding methods, including cryptos and e-wallets
  • Trade binary contracts from $0.10 allowing trading opportunities for all budgets
  • Simple and straightforward proprietary platform for binary options trading

Cons

  • Not overseen by any reputable regulator, raising risks and reducing customer protections
  • Not available to traders based in the US
  • The $250 minimum deposit is higher than most binary options brokers
Visit BinaryCent
BinaryCent Review

InstaTrade

"Although InstaTrade offers active trading on a comprehensive platform, it stands out with its fairly unique Fixed Income Structured Product (FISP), providing passive investment opportunities with up to 50% returns in 6 months if conditions are met. "

Christian Harris, Reviewer

InstaTrade Quick Facts

GBPUSD Spread0.2
EURUSD Spread0.0
EURGBP Spread2.8
Total Assets65
Leverage1:1000
PlatformsInstaTrade Gear, MT4
Account CurrenciesUSD, EUR, RUB

Pros

  • InstaTrade delivers an excellent suite of charting tools for day traders with its web trader comprising 250+ indicators, 11 chart types and a user-friendly design.
  • InstaTrade claims to "guarantee" returns through the structured element of its passive trading solution (FISP), with applications approved within 24 hours.
  • Despite an average investment offering of around 300 assets, InstaTrade offers a particularly strong suite of currency pairs, catering to advanced traders seeking opportunities in volatile exotics.

Cons

  • InstaTrade’s growing educational tools provide valuable information for aspiring traders, but still trail category leaders like eToro with no structured course based on experience level.
  • InstaTrade sports one of the most cluttered websites and client cabinets in the industry, potentially overwhelming new traders, especially compared to XTB’s intuitive trading journey and resources.
  • Profits are only guaranteed in the FISP if investors do not reach the 50% profit level and attract other users with a total sum of $4 for each dollar in compensation.
Visit InstaTrade
InstaTrade Review

UnitedPips

"UnitedPips is ideal for traders seeking leveraged trading opportunities, the security of fixed spreads, and the flexibility to deposit, withdraw, and trade cryptocurrencies - all in one sleek TradingView-powered platform."

Christian Harris, Reviewer

UnitedPips Quick Facts

Bonus Offer40% Deposit Bonus
GBPUSD Spread1.3
EURUSD Spread0.7
EURGBP Spread1.1
Total Assets40+
Leverage1:1000
PlatformsUniTrader
Account CurrenciesUSD

Pros

  • UnitedPips offers impressive leverage up to 1:1000 with zero swap fees or commissions, which can enhance potential returns for day traders and swing traders looking to control prominent positions with less capital.
  • UnitedPips’ platform performs well, with an intuitive design that will appeal to beginners, while the TradingView integration delivers powerful charting tools without overwhelming users, making it straightforward to execute trades efficiently.
  • Although being handed off mid-chat due to shift changes during testing was frustrating, customer support is generally good with quick, helpful responses, and 24/7 support via phone and email for regional teams is a definite advantage.

Cons

  • Unlike brokers such as IG, UnitedPips is an offshore broker not regulated by any 'green tier' financial authorities, raising concerns for traders seeking assurance and protection under well-established regulatory frameworks.
  • UnitedPips lacks comprehensive research, while the educational content for beginner traders is woeful. Compared to brokers like eToro, which offers tutorials, webinars, and advanced courses, UnitedPips offers minimal resources to help new traders understand key concepts.
  • UnitedPips' selection of tradable instruments is still minimal, comprising a bare minimum selection of forex, metals and crypto. There are no equities, indices or ETFs, which may be a drawback for experienced traders looking for diverse opportunities.
Visit UnitedPips
UnitedPips Review

World Forex

"World Forex provides both highly leveraged CFDs and digital contracts, making this a good broker for clients who want flexible and rewarding ways to trade. The copy trading service will also appeal to newer traders."

Tobias Robinson, Reviewer

World Forex Quick Facts

Bonus Offer100% Deposit Bonus
GBPUSD SpreadFrom 0.6
EURUSD SpreadFrom 0.6
EURGBP SpreadFrom 0.6
Total Assets53
Leverage1:1000
PlatformsMT4, MT5
Account CurrenciesUSD, EUR, RUB

Pros

  • Educational content
  • A wide range of assets to trade, including via digital contracts
  • 10+ accepted payment methods

Cons

  • Withdrawal fees apply
  • No negative balance protection
  • Weak regulation
Visit World Forex
World Forex Review

Chart

GBPUSD Chart by TradingView

Why Day Trade GBP/USD?

There are many reasons why thousands of people head online to day trade the GBP/USD every day. Some of the biggest benefits are detailed below.

Drawbacks & Risks

Trading the GBP/USD forex pair appeals for many reasons, but there are also risks to be aware of:

So, day trading the GBP/USD may offer plenty of profit potential, but it does have its drawbacks. Those investing in the currency pair should be aware of both sides of the coin before risking their capital.

Influences on Movement

As you have probably gathered without the use of GBP/USD 20-year, 50-year, and 100-year charts, several factors shape market sentiment and prices. The most influential of which are as follows:

Currency Correlations

What may not be clear on your GBP/USD real-time chart is the impact of ‘currency correlations.’ This may just be a phrase you have come across in forums.

Because currencies are priced in pairs, no single pair is totally independent of the others. For example, if you are trading the British pound against the Japanese yen (GBP/JPY), you are actually investing in a derivative of the GBP/USD and USD/JPY pairs. To some extent, GBP/JPY has to be related to either or both of the other currency pairs.

Calculation

Correlation is a statical measure of the relationship between currency pairings. It can range from -1 to +1. The former suggests the currency pairs will move in the opposite direction, while the latter means they will move in the same direction. If the correlation is zero, the relationship is arbitrary.

The most efficient way to get your head around currency correlations is to calculate them yourself. Fortunately, it is relatively straightforward. An Excel spreadsheet will be your calculator, as you can use the correlation function (=CORREL). Once you have that, do the following:

It’s also worth keeping in mind that over time correlations can change. This can be as a result of monetary policy, plus economic and political factors.

Day Trading GBP/USD Strategy

Whatever your trading plan, whether it relies on weekly pivots and analysis or historical data in Excel and 5-year averages, all the points and examples of strategy below can be of use.

Timing

Because the forex market is open 24 hours, there is a frequent notion that you should be trading GBP/USD all day. That is not the case. Day traders that succeed will focus on moments when there is adequate volatility and volume to make more than the spread and/or fee.

Spreads widen in calm times and narrow in hectic times. So, instead of trading from Sunday evening through Friday afternoon, select specific periods. The best window is when both the UK and US markets are open. The ideal time to day trade the GBP/USD is between 8:00 and 10:00 GMT, plus 12:00 and 15:00 GMT. The most important daily changes are here, and spreads have little impact on profit.

So, whichever method you choose to determine support and resistance levels, trading during busy times frequently has the most profit potential.

Trading Breakouts Strategy

There is ample opportunity to day trade breakouts with the GBP/USD currency pairing. You need to look for solid risk-reward ratios. For example, risking 25 pips, but aiming for 100 pips if correct.

Opt for an aggressive 1:4 risk/reward ratio as above, and you can be right far less. On top of that, don’t risk too much capital per trade. Many suggest investing no more than 1-2% of your account balance on a single transaction. That way, you will protect yourself from losses and ensure you live to fight another forex day.

Trading News

Those less interested in day trading GBP/USD might choose 15-minute and 1-hour charts with technical forecasts. But instead, you can trade on today’s news.  This article has explored several of the GBP/USD influences. For example, economic data on the UK unemployment rate, manufacturing growth, consumer sentiment, and expenditure will all affect the needle.

Google Finance, Yahoo Finance, DailyFX, and Bloomberg provide live forex news updates. You may get an advantage if you can respond faster than the market. They also provide GBP/USD rates, forecasts, and the commentary you need to evaluate your positions.

In addition, whether your strategy revolves around wave counts via Elliot wave analysis, or breakout strategies, getting the latest forecasts, for this week and next will put you in a stronger position. Many of the news sources mentioned above provide excellent services to this end.

Forecasts

Long-term forecasts can often provide a strategy or at least single trades. Major users of the forex markets are utilizing the same long-term forecasts and economic outlook predictions. So, governments or corporations exchanging currency are doing so based on similar price movement expectations. This can often lead to self-fulfilling forecasts as those larger trades are either all being held, or all being pushed through.

One word of caution here is that too much reliability is placed on economic experts. If their predictions were properly recorded and tested, they might not be as reliable as people think.

4-Hour GBP/USD Strategy

You may want to view both a 4-hour and daily chart. Investors will use both to make decisions. The daily time frame will help identify the main trend while the 4-hour timeframe will be for entering positions.

You then need two forex indicators:

  1. Use a slow stochastic indicator with the following (13, 5, 5) settings applied to both charts
  2. Also, use an exponential moving average 4, EMA 14, and EMA 50 on the 4-hour chart

Selling Rules

Buying Rules

If the trend is strong today, you’ll make a decent number of pips. Because you enter on or just after where the exponential moving average crossover takes place, you enter as the trend starts and not halfway through.

For more guidance, see our strategy page.

History

Early Days

To effectively day trade on the GBP/USD, also known as the ‘cable’ (named after the transatlantic cable laid between the two nations), it helps to understand their turbulent relationship.

Trade has existed between the two currencies for so long there is no way to put forward an original pound dollar exchange rate. It wasn’t until the early 1970s that the concept of the GBP/USD we know today existed. Change was brought around by the transition to floating exchange rates by both the US and UK.

Before 1971, foreign exchange rate history was tied to the value of gold. This was a result of agreements reached in 1944 at the Bretton Woods Conference. The effects of which would have implications on the GBP/USD for nearly three decades.

With the end of Bretton Woods, the GBP/USD exchange rate became more volatile. During the 1980s, the pair’s prices moved widely. Several events in 1985 caused these fluctuations:

Impact

So, what went on in the US?

Exchange rates reflected Britain’s prosperity and America’s failure. As expected, the pound rose versus the dollar.

But then Reaganomics restored the status quo. High-interest rates were one of the key changes. Following tax cuts and military spending, the US economy boomed again. By 1985, the US dollar had risen 50% against leading currencies.

1990s Intervention

As part of the Exchange Rate Mechanism (ERM), the BoE boosted sterling’s value against the German Deutschmark. In a recession, higher interest rates were insufficient.

George Soros and others quickly saw the BoE’s predicament. His response: pound short. On September 16, 1992, Britain quit the ERM, abandoning expectations of sustaining the pound. In only one day, the pound lost 25% versus the dollar.

This all helps emphasize the use of historical facts and data on future GBP/USD outlook and forecasts.

2007 Crisis

A sub-prime crisis occurred before the 2008-2009 worldwide downturn. By summer of 2007, many big US financial firms were in danger. Because the worldwide consequences were not fully grasped, the pound gained versus the US dollar for much of 2007. In November 2007, it stood at 2.1163. After assessing the impact, the BoE slashed the bank rate to 0.5 percent and launched quantitative easing (QE).

Brexit

Another significant milestone came with the 2016 Brexit decision. The GBP/USD exchange rates and prices quickly shifted. The pound’s value sunk against the US dollar and other major currencies. Against the US dollar, the pound fell from $1.466 to $1.3694 when the result was announced. It then dropped to $1.2232 by October 2016, a fall of 16%. By the middle of 2017, the pound had stabilized.

Role of the Great British Pound

Despite its small size, the UK has one of the world’s largest economies. It is vital in international financial markets, and London is the FX capital.

For nearly a century, the UK was the world’s economic superpower. The British pound was then the unofficial reserve currency. During the two world wars, the UK declined, while the US grew as the world’s main economic power.

Government rules and labor market restrictions also harmed the UK economy. London’s rise as a worldwide financial powerhouse has helped stabilize the economy since then. It also helps that the UK is the second-largest oil and gas producer in Europe after Norway.

Role of the US Dollar

A fundamental part of GBP/USD trading economics is understanding the US dollar’s crucial role. It is of great importance for the following reasons:

FX day traders, therefore, need to understand what influences the US economy to forecast in which direction the US dollar will go.

You should consider the following economic indicators:

Final Word on GBP/USD Day Trading

As two of the most widely traded currencies in the world, the GBP/USD currency pairing attracts day traders from all over. Narrow bid-ask spreads and a generous choice of trading vehicles, including futures and options, will continue to reel in aspiring traders.

However, to profit in the crowded forex market, you will need to find an edge. Live chart investing is never straightforward. So, day trading during specific periods and utilizing volume will allow you to bring meaning to price fluctuations. Using signals and trends will also help you spot promising financial opportunities.

If you can do all that while overcoming the numerous risks, you may be taking the first step to joining the likes of successful forex traders, such as Micheal Marcus and Paul Tudor Jones.

You may also want to see our forex day trading page for further guidance.

FAQ

What Is The Best Time For Trading GBP/USD?

The most volatile time to trade the pair is when both the US and London markets are open simultaneously. This is between 08:00 and 10:00 GMT, plus 12:00 and 15:00 GMT.

When Shouldn’t You Trade GBP/USD?

One of the worst times to trade GBP/USD is the first or the last day of the week. This is because investors are slowly returning to the market, Monday can have low volatility and fewer opportunities for profits. Friday is also bad because of the over-weekend risk, when you won’t be able to close your positions. The market can also create significant gaps at the beginning of the week.

How Much Does GBP/USD Move Daily?

Investors must use caution when trading GBP/USD as the average daily change is 160 pips. This makes it one of the most volatile top forex pairs.

Is GBP/USD A Profitable Currency Pair To Trade?

High volatility and deep liquidity make it one of the most suitable day trading pairs. This means plenty of opportunities to turn a profit. In addition, it’s also one of the easiest pairs to trade using technical analysis.

The pair owes its popularity to the composing currencies; they are representative of two of the most influential world economies. Political and financial decisions taken by the US or the UK impact the international markets and economy.