Trading GBP/HUF

The GBP/HUF is an interesting forex instrument that couples two economies within Europe that do not use the euro. Historically demonstrating high volatility thanks to the exotic Hungarian forint and a relatively stable base in the pound sterling, traders can expand their portfolio and capitalise on strong price movements, if they can accurately forecast swings.

With this pair, the GBP is the base currency, and the HUF is the quote currency. This means that, when given an exchange rate from a broker or a live chart, the value is how many HUF can be bought per 1 GBP.

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Exotic Pairs

Exotic currency pairs are composed of a major currency and a currency from a developing or emerging economy, as with the major GBP and the exotic HUF. These pairs offer opportunities to diversify trading portfolios by moving away from the key players in the forex market.

Exotic pairs are a double-edged sword, offering greater volatility but lower liquidity than major and minor pairs. The greater volatility of smaller markets produces more profit potential, thanks to larger and more sudden price movements, though this can also increase the risk of losses.

The lower liquidity of pairs such as GBP/HUF can also result in slippage, which is when your order fills at a different price from when it was requested.

UK Economy

The British economy is one of the biggest in the world, with the fifth largest nominal GDP in 2020 at US$2.64 trillion. Its currency, the pound sterling (GBP) is the oldest in the world and is used in the UK and several overseas territories and islands. While the UK temporarily followed the gold standard in the 20th century, it has been a free-floating currency since 1971.

The GBP is the fourth most traded currency in the world, involved in 13% of daily trade volumes. This provides relatively good levels of liquidity, even for exotic pairs like the GBP/HUF.

Investing in the GBP/HUF

The financial services field is the most important in the British economy, helping services contribute to 80% of the GDP. The UK is also one of the biggest exporters and importers of goods and services in the world; Britain’s top trading partners are Germany, France and the USA. The Bank of England (BoE) is responsible for managing the pound sterling’s interest rates and monetary policies.

Hungarian Economy

The second economy directly linked to the GBP/HUF FX pair, the Hungarian economy is much smaller, producing a nominal GDP of US$140 billion in 2020. Although Hungary is a member of the EU, it has not joined the eurozone and instead manages its own currency, the Hungarian Forint (HUF). The forint was introduced in 1946, after the Second World War, and was pegged to the price of gold until 2008, when it became free-floating.

How to trade GBP/HUF

Hungary’s most important sector by GDP is tertiary services, followed by industry then agriculture. The economy places a large emphasis on foreign trade, with a high trade surplus of more than US$6.5 billion in 2020.

Similar to the Bank of England with the GBP, HUF policies are implemented and managed by the Hungarian National Bank (HNB), which is currently focussing on an inflation target of 3%.

GBP/HUF Exchange Rate History

Looking at graphs over the last 10 years, the trend for GBP/HUF has been positive since the Hungarian forint became free-floating in 2008. Charts and diagrams indicates a slowly weakening forint compared to the pound sterling. After 2015, the forint began to strengthen for two years, reaching its best exchange rate of 327 HUF into 1 GBP in August 2017, after which it began steadily weakening again.

Factors Affecting GBP/HUF

Forex pairs are complicated instruments, with many different factors capable of causing changes in exchange rates and forecasts. Some of the most important tools for making comparisons are:

  • Economic growth – The health and performance of an economy are directly linked to the performance of its currency. GDP graphs are a simple, widely used indicator of economic health that can be tracked to judge changes in GBP/HUF exchange rates.
  • Inflation – All economies are subject to inflation, and when a currency inflates, its strength relative to other currencies must decrease to reflect a balance in prices for goods and services. Look out for Consumer Price Index (CPI) reports from each country and compare each level to gauge whether one economy has strengthened or weakened next to the other.
  • Monetary policy – Large differences in monetary policy between two currencies provides room for speculation upon the exchange rates, which can raise volatility. This could give an already volatile exotic pair like GBP/HUF even more profit potential, as well as greater risk of losses.
  • Other economic releases – There are many economic reports released each year by governments, such as consumer confidence, balance of payments and industrial production figures. Many experts attempt to predict the outcome of such reports, and the level to which these are correct or wrong often results in market changes.

Trading Tips

When To Trade

Ensuring you trade at the right time is particularly important with exotic FX pairs like GBP/HUF. Its rate may seem favourable at a certain time but trading when liquidity levels are low and spreads are high can greatly mitigate your profits, and sometimes even remove them.

The best time to invest in GBP/HUF is during the overlap between the London Stock Exchange change session and the Budapest Stock Exchange session, which occurs between 08:00 GMT and 16:00 GMT. This is when trading volume is highest, spreads are lowest and slippage is least likely to occur.

Where To Trade

Given the low trading volumes of exotic currency pairs, some brokers either do not offer them at all or offer poor spreads. If you intend to trade GBP/HUF, check that your broker offers the pair, and with a competitive spread, preferably before opening an account.

Final Word On Trading GBP/HUF

Trading the GBP/HUF is an interesting opportunity that can provide traders with greater volatility and profit potential than the standard major and minor pairs. This can also increase the risks of loss, so be sure to understand trading strategies, assess current events and analyse economic releases before investing. Real-time charts and exchange rate history are also key tools when making GBP/HUF predictions.


What Is The GBP/HUF Conversion Rate?

The current spot rate shows how many HUF converts to 1 GBP. This can be used as a converter by multiplying the number of pounds you want to sell for HUF or dividing your HUF to buy GBP. See our live chart for the current exchange rate.

Will The Hungarian Forint Get Stronger In 2021?

The forecast for the GBP/HUF currency pair depends on several factors, including the fallout of the COVID 19 pandemic. Alongside the trade and recovery implications of this, many economic factors must be considered. For example, a simple prediction could be that, given the Hungarian inflation target is higher than the UK’s, the forint may continue to weaken, however, there are myriad other influences in play.

Will Hungary Join The European Monetary Union?

Hungary is currently preparing to adopt the euro and become a member of the EMU. However, there is currently no target date for the event and the forint is not yet within the exchange rate mechanism (ERM II).

How Can I Forecast The GBP/HUF Exchange Rate?

There is no end to forex trading strategies and data available online that can help predict exchange rates. On top of government-released statistics, graphs and diagrams, you should look over historical charts and consider current events to formulate your predictions or reassure yourself of a selected strategy.

GBP Vs HUF, Which Is The Stronger Currency?

Looking at the history of how many HUF can be bought with 1 GBP, the pound is significantly stronger. A comparison over the full time that the two currencies have been tradeable shows that, while the forint is slightly stronger now than the years 2000 and 2015, it is still much weaker than the British pound.