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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.
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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
    3.5 / 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
    USD
    Go To NinjaTrader
  3. 3
    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
  4. 4
    IG
    Forex trading involves risk. Losses can exceed deposits.
    Ratings
    4.9 / 5
    4 / 5
    4.5 / 5
    3.5 / 5
    4.8 / 5
    4.5 / 5
    4.9 / 5
    5 / 5
    4.6 / 5
    4 / 5
    $0
    0.01 Lots
    1:30 (Retail), 1:250 (Pro)
    FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOB
    CFDs, Forex, Stocks, Indices, Commodities, ETFs, Futures, Options, Crypto, Spread Betting
    Web, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral
    PayPal, Wire Transfer, Mastercard, Credit Card, Visa, Debit Card
    USD, EUR, GBP, CAD, AUD, JPY, ZAR, SEK, DKK, CHF, HKD, SGD
    Go To IG
  5. 5
    Interactive Brokers
    Ratings
    4.5 / 5
    3.5 / 5
    4.5 / 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
    Stocks, Options, Futures, Forex, Funds, Bonds, ETFs, Mutual Funds, CFDs, Cryptocurrencies
    Trader Workstation (TWS), IBKR Desktop, GlobalTrader, Mobile, Client Portal, AlgoTrader, OmniTrader, 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
  6. 6
    Videforex
    20% to 200% Deposit Bonus
    $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
  7. 7
    RaceOption
    20% - 200% Deposit Bonus
    $250
    $0.01
    1:500
    Binary Options, CFDs
    TradingView
    Credit Card, Debit Card, Bitcoin Payments, Neteller, Skrill, Perfect Money, Mastercard, Visa, Ethereum Payments
    USD, EUR, GBP, AUD, RUB
    Go To RaceOption
  8. 8
    Binarium
    $5
    $1
    Forex, Stocks, Cryptos
    Own
    QIWI, Yandex Money, Bitcoin Payments, Neteller, WebMoney, Wire Transfer, Visa, Mastercard, Credit Card, Debit Card
    USD, EUR, AUD, RUB
    Go To Binarium
  9. 9
    Pocket Option
    50% Deposit Bonus
    Ratings
    2 / 5
    3.5 / 5
    2.5 / 5
    3.5 / 5
    3.3 / 5
    3.3 / 5
    3 / 5
    3.5 / 5
    4 / 5
    4.2 / 5
    $50
    $1
    MISA
    Binary Options, Currencies, Commodities, Stocks, Indices, Cryptos
    Web, MT4, MT5
    Wire Transfer, Credit Card, Bitcoin Payments, Volet, Perfect Money, Visa, Mastercard, Debit Card, WebMoney, FasaPay, Ethereum Payments, Maestro, JetonCash
    USD
    Go To Pocket Option
  10. 10
    xChief
    $100 No Deposit Bonus
    $10
    0.01 Lots
    1:1000
    VFSC
    CFDs, Forex, Metals, Commodities, Stocks, Indices
    MT4, MT5
    Wire Transfer, Bitcoin Payments, Credit Card, UnionPay, Skrill, Neteller, WebMoney, Perfect Money, Debit Card, Ethereum Payments, FasaPay, Volet
    USD, EUR, GBP, JPY, CHF
    Go To xChief

Here is a short summary of why we think each broker belongs in this top list:

  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. 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.
  4. IG - IG offers an above-average suite of 80+ currency pairs on its proprietary web platform, mobile app or MetaTrader 4, with more advanced charts and forex analysis tools available on the ProRealTime software. Forex spreads are competitive based on tests, starting from 0.1 pips on majors like the EUR/USD.
  5. 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.
  6. Videforex - Trade 35 major, minor and exotic forex pairs through CFDs with floating spreads from 0.1 pips. Alternatively, binary options allow you to speculate on rising and falling prices with a fixed stake and payout.
  7. RaceOption - Trade 25+ major and minor currency pairs with access to over 30 technical indicators in the broker's proprietary terminal. You can also follow and replicate other forex trades using the integrated copy trader.
  8. Binarium - Trade 20 forex pairs, including majors like EUR/GBP and USD/GBP as well as minor pairs. On the downside, this isn't the most varied selection of currencies available.
  9. Pocket Option - Binary and OTC options can be purchased on 40+ currency pairs, with 55+ currency pairs available if you deposit $1000. Typical payouts are reasonable at 81% and the $1 minimum trade makes the broker accessible to new forex traders. There is also access to the MT4 and MT5 platforms for experienced forex traders.
  10. xChief - ForexChief supports spot foreign exchange trading on all account types for 40+ major, minor and exotic currency pairs. Trading takes place on the leading MT4 and MT5 platforms, which offer dozens of in-built technical tools for short-term forex strategies.

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
OANDA US logo
65+ 1.6 4 / 5 $0 NFA, CFTC
IG logo
80+ 0.8 4.9 / 5 $0 FCA, ASIC, NFA, CFTC, DFSA, BaFin, MAS, FSCA, FINMA, CONSOB
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
Videforex logo
35 Floating from 0.1 pips 2.5 / 5 $250 -
RaceOption logo
25+ Floating - $250 -
Binarium logo
20 N/A - $5 -
Pocket Option logo
55+ N/A 3.8 / 5 $50 MISA
xChief logo
40 0.4 - $10 VFSC

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

  • 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.
  • FOREX.com offers industry-leading forex pricing starting from 0.0 pips, alongside competitive cashback rebates of up to 15% for serious day traders.
  • 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.

Cons

  • FOREX.com's MT4 platform offers approximately 600 instruments, significantly fewer than the over 5,500 available on its non-MetaTrader platforms.
  • There’s no negative balance protection for US clients, so you may find yourself owing more money than your initial deposit into your account.
  • 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

  • Low fees are offered, with $50 day trading margins & commissions from $.09 per micro contract
  • NinjaTrader continues to deliver comprehensive charting software for active day traders with bespoke technical indicators and widgets
  • Traders can get free platform access and trade simulation capabilities in the unlimited demo

Cons

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

  • Seasoned day traders can access industry-leading tools, including an MT4 premium upgrade and advanced charting provided by MotiveWave
  • The broker offers a transparent pricing structure with no hidden charges
  • The proprietary OANDA web platform continues to deliver a highly competitive charting environment, including 65+ technical indicators powered by TradingView

Cons

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

IG

"IG continues to provide a comprehensive package with an intuitive web platform and best-in-class education for beginners, plus advanced charting tools, real-time data, and fast execution speeds for experienced day traders."

Christian Harris, Reviewer

IG Quick Facts

GBPUSD Spread0.9
EURUSD Spread0.8
EURGBP Spread0.9
Total Assets80+
Leverage1:30 (Retail), 1:250 (Pro)
PlatformsWeb, ProRealTime, L2 Dealer, MT4, AutoChartist, TradingCentral
Account CurrenciesUSD, EUR, GBP, CAD, AUD, JPY, ZAR, SEK, DKK, CHF, HKD, SGD

Pros

  • The IG app offers a superb mobile trading experience with a clean design that helped it secure Runner Up at our Best Trading App award
  • IG is amongst the best in terms of its range of instruments, which includes stocks, forex, indices, commodities, and cryptocurrencies, providing ample diversification opportunities
  • As a well-established broker, IG operates under strict regulatory guidelines in multiple jurisdictions, maintaining a high level of trust

Cons

  • Stock and CFD spreads still trail the cheapest brokers like CMC Markets based on tests
  • While there is negative balance protection in the UK and EU, there is no account protection or guaranteed stop losses for US clients
  • IG has discontinued its swap-free account, reducing its appeal to Islamic traders
Visit IG
IG 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, eSignal, TradingCentral
Account CurrenciesUSD, EUR, GBP, CAD, AUD, INR, JPY, SEK, NOK, DKK, CHF, AED, HUF

Pros

  • The TWS platform has clearly been built for intermediate and advanced traders and comes with over 100 order types and a reliable real-time market data feed that rarely goes offline.
  • 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.
  • With low commissions, tight spreads and a transparent fee structure, IBKR delivers a cost-effective environment for short-term traders.

Cons

  • 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.
  • 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.
  • You can only have one active session per account, so you can’t have your desktop program and mobile app running simultaneously, making for a sometimes frustrating trading experience.
Visit Interactive Brokers
Interactive Brokers Review

Videforex

"Newer traders will find a lot to enjoy about trading binary options on Videforex's easy-to-use proprietary platform, as well as the broker's copy trading solution. Payouts also remain higher than most alternatives climbing to 98%."

William Berg, Reviewer

Videforex Quick Facts

Bonus Offer20% to 200% Deposit Bonus
GBPUSD SpreadFloating from 0.1 pips
EURUSD SpreadFloating from 0.1 pips
EURGBP SpreadFloating from 0.1 pips
Total Assets35
Leverage1:500
PlatformsTradingView
Account CurrenciesUSD, EUR, GBP, AUD, RUB

Pros

  • You can easily mirror the trades of experienced investors with low fees
  • The support times are fast and reliable based on tests - few brokers offer 24/7 multi-lingual video support
  • The firm facilitates both day trading and binary options which is great for those looking to diversify their portfolios

Cons

  • US clients aren’t accepted due to legal restrictions
  • The broker isn’t overseen by a trusted regulatory agency
  • No MetaTrader 4 integration
Visit Videforex
Videforex Review

RaceOption

"RaceOption will appeal to traders new to binary options looking for copy trading, contests and 24/7 customer support. Experienced traders will also appreciate the account-based perks and bonuses."

William Berg, Reviewer

RaceOption Quick Facts

Bonus Offer20% - 200% Deposit Bonus
GBPUSD SpreadFloating
EURUSD SpreadFloating
EURGBP SpreadFloating
Total Assets25+
Leverage1:500
PlatformsTradingView
Account CurrenciesUSD, EUR, GBP, AUD, RUB

Pros

  • Sign-up bonuses from 20%, plus weekly trading contests and prize giveaways
  • Flexible weekend trading available plus 24/7 multilingual customer support
  • Beginner-friendly copy trading opportunities in the broker's proprietary trading platform

Cons

  • Limited educational resources
  • Withdrawal thresholds apply
  • $250 minimum deposit is higher than other binary options brokers
Visit RaceOption
RaceOption Review

Binarium

"Binarium is a good binary options broker for traders looking for an experienced brand with low deposit requirements and a welcome bonus."

William Berg, Reviewer

Binarium Quick Facts

GBPUSD SpreadN/A
EURUSD SpreadN/A
EURGBP SpreadN/A
Total Assets20
PlatformsOwn
Account CurrenciesUSD, EUR, AUD, RUB

Pros

  • Enhanced educational features
  • Demo account with virtual funds
  • Flexible payment methods and account currencies, including support for crypto payments

Cons

  • Limited information on broker’s website
  • Lower payouts than other binary options brokers
  • No industry established trading terminals
Visit Binarium
Binarium Review

Pocket Option

"Pocket Option excels for its easy-to-use web platform which provides a best-in-class user experience for short-term binary traders. The $50 minimum deposit is also accessible for beginners while opening an account is really easy. Looking at the negatives, Pocket Option still trails alternatives in its market offering and regulatory credentials."

Jemma Grist, Reviewer

Pocket Option Quick Facts

Bonus Offer50% Deposit Bonus
GBPUSD SpreadN/A
EURUSD SpreadN/A
EURGBP SpreadN/A
Total Assets55+
PlatformsWeb, MT4, MT5
Account CurrenciesUSD

Pros

  • Extremely fast and smooth sign-up process that takes less than 2 minutes
  • Well-funded traders who deposit $1000+ can qualify for a 2%+ payout boost, more tradable assets and exclusive perks
  • The MetaTrader platforms offer integrated analysis with helpful technical summaries for short-term traders

Cons

  • Pocket Option offers a slimmed down iteration of the MT4 and MT5 that doesn't provide the full charting package for advanced traders
  • Despite offering competitive payouts up to 92%, binary brokers like IQCent offer higher returns up to 98% based on tests
  • The maximum binary contract length of 4 hours is restrictive for longer-term trading strategies. Alternatives like Videforex offer binaries up to 1 month
Visit Pocket Option
Pocket Option Review

xChief

"xChief continues to prove popular with investors looking to trade highly leveraged CFDs on the popular MetaTrader platforms. The broker's rebate scheme and investment accounts will particularly appeal to seasoned traders. However, the lack of top-tier regulatory oversight is a major drawback."

William Berg, Reviewer

xChief Quick Facts

Bonus Offer$100 No Deposit Bonus
GBPUSD Spread0.9
EURUSD Spread0.4
EURGBP Spread0.9
Total Assets40
Leverage1:1000
PlatformsMT4, MT5
Account CurrenciesUSD, EUR, GBP, JPY, CHF

Pros

  • xChief offers STP/ECN execution with low spreads from 0.0 pips and low commission rates starting from $2.50 per side
  • The low minimum deposit of $10 will appeal to beginners, as well as the beginners’ guides in the Library
  • Traders can access a copy trading solution via the MetaQuotes Signals service

Cons

  • The total range of 150+ assets is much lower than most competitors who typically offer hundreds
  • Fees and minimums are imposed on most withdrawal methods, including a €60 minimum for SWIFT bank transfers
  • xChief is an offshore broker with weak regulatory oversight from the VFSC, so traders will receive limited safeguards
Visit xChief
xChief 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.