Trading GBP/USD

Written By

Jemma Grist

Edited By

Tobias Robinson

Fact Checked By

William Berg

Updated

Jan 8, 2026

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.

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Chart

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.

Volatility – GBP/USD can be more volatile than some other major pairs at times. During news shocks or thin-liquidity periods, spreads can widen, so execution quality matters.
Relative safety – As two of the most modern economies in the world, the GBP/USD offers a multitude of resources for finding price information and data. London is the world’s largest FX trading centre, with the UK accounting for about 38% of global FX turnover in April 2025.
Diverse trading vehicles – GBP/USD is among the most traded currency pairs globally. In the BIS Triennial Survey, it accounted for 7.6% of global turnover in April 2025. This means a wide range of investment vehicles and opportunities are available.
Manoeuvrability – Those day trading the GBP/USD will benefit from a sizeable number of pips in a single move compared to other major pairs. This makes it ideal for breakout trading. However, it also brings risk, so utilizing stop losses is essential.
Availability of resources – Conducting technical analysis is easier than ever before. You have graph history, long-term charts, and 1-minute data just a few clicks away. Also, news resources and trading forums will offer predictions for today and long-term forecasts.

Drawbacks & Risks

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

Rapid movement – The GBP/USD can move quickly. While this is great for fast, decisive traders, it also means you can lose money quickly. You need to be disciplined to counter this, employing effective risk and money management strategies.
Report heavy – The pair often responds significantly to UK economic reports, especially when data does not align with monetary policy speculation and expectations.
Ambiguity – The volatility of the GBP/USD often results in false signals and breakouts. Traders with less experience may fall victim to misleading movements. Some argue that beginners should instead focus their attention on other currency pairs.
Automated competition – Electronic and algorithmic trading play a major role in modern FX markets, so many short-term edges are competed away quickly.

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.

For UK readers, see the FCA policy statement restricting CFDs sold to retail clients and the FCA warning on CFD protections. If you’re in the US, review CFTC guidance on retail foreign currency trading risks.

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Before opening an account, check the broker on the FCA Firm Checker to confirm they’re authorised and permitted to offer the services you want.

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:

Economic growth – When the US economy looks stronger than the UK’s, the dollar usually rises against the pound. Likewise, when the UK economy outperforms the US’, the dollar typically weakens vs. the pound. Interest rates, labor productivity and increased investment can all boost growth (see ONS GDP quarterly national accounts for the UK).
Political events – Political decisions can trigger movement in the GBP/USD currency pairing. Major elections, for example, can have a noticeable impact.
Monetary policy – The actions of the Fed (the US Federal Reserve) and BoE (Bank of England) can seriously influence rates.

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 trade the British pound against the Japanese yen (GBP/JPY), you’re trading a cross rate that’s mathematically related to GBP/USD and USD/JPY (via triangular pricing). To some extent, GBP/JPY has to be related to either or both of the other currency pairs.

Calculation

Correlation is a statistical 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 Microsoft’s correlation function (=CORREL). Once you have that, do the following:

Input pricing data for your two currency pairs, for example, GBP/USD and EUR/USD
Create two individual columns, each titled with one of the pairs
Now fill the columns with the past daily prices over the time period you are using
In an empty box at the bottom, type in =CORREL
If you highlight all the data in one of the columns, you will get a range of cells in the formula box
Then simply type in a comma
Follow steps 3-5 for the other currency
Now close the formula. It should then look like =CORREL (A1: A25, B1: B25)
The final figure you get is the correlation between the two currency pairs

It’s also worth keeping in mind that over time, correlations can change. This can be 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 who succeed will focus on moments when there is adequate volatility and volume to make more than the spread and/or fee.

Spreads are usually tightest when liquidity is highest (often during session overlaps), but they can widen during major news shocks or thin-liquidity periods. 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. GBP/USD liquidity is often highest during the London–New York overlap (roughly 13:00–17:00 GMT, shifting with daylight saving). 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. For primary releases, monitor the BLS Employment Situation (nonfarm payrolls) and the BLS Consumer Price Index news release.

Secondary sources like Google Finance, Yahoo Finance, DailyFX, and Bloomberg can also 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 a 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:

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

Selling Rules

Once the 4 EMA crosses 50 EMA, followed by 14 EMA to the downside on your 4-hour chart, then place a sell trade at market order. Alternatively, place a pending sell stop order on the opening of the new candlestick
Enter a stop loss at 50 pips
Profit can be taken at 150 pips, which is three times what you risked

Buying Rules

Once 4 EMA crosses 50 EMA, followed by 14 EMA to the upside on your 4-hour chart, place a buy trade at market order. Alternatively, place a pending buy stop order where the new candlestick opens
Again, place a stop loss at 50 pips.
Profit can be taken at 150 pips

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.

GBP/USD trading chart at IG showing 4-hour strategy indicators applied

History

Early Days

To effectively day trade on the GBP/USD, also known as the ‘cable’ (referencing the transatlantic telegraph cables that carried price quotes between London and New York), it helps to understand their turbulent relationship.

Trade has existed between the two currencies for so long that 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, the 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. GBP/USD was particularly volatile in the 1980s, with major moves around policy shifts and international coordination, most notably the Plaza Accord (1985), which helped reverse the strong US dollar.

Impact

So, what went on in the US?

The 1970s brought the rise of Organisation of Petroleum Exporting Countries (OPEC) and oil prices. However, at the same time, an oil shortage restricted economic output
The 1980s kicked off following an extended state of unease in the US economy
Following the Vietnam War, unemployment rates were high. This was coupled with the Federal Reserve System (Fed) failing to introduce measures to ease rising inflation

The early–mid 1980s featured a strong US dollar; sterling weakened substantially, reaching an all-time low near $1.05 in 1985.

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 16 September 1992 (Black Wednesday), the UK exited the ERM and sterling fell sharply, about 4% versus the dollar on the day (with a larger depreciation over the broader episode).

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

2007 Crisis

A subprime crisis occurred before the 2008-2009 worldwide downturn. By the 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. During the financial crisis, the BoE cut rates over time, reaching 0.5% on 5 March 2009, when it also announced an initial £75bn asset purchase programme (QE).

Brexit

Another significant milestone came with the 2016 Brexit decision. The GBP/USD exchange rates and prices quickly shifted. The pound’s value sank against the US dollar and other major currencies. After the June 2016 Brexit referendum, sterling sold off sharply, with the pound falling roughly 8–10% against the dollar on 24 June 2016 amid extreme volatility.

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. The UK also remains one of Europe’s largest hydrocarbon producers, often cited as second to Norway, though production and rankings vary by year and measure (see UK government analysis noting the UK is Europe’s second-largest gas producer and the NSTA UK Continental Shelf reserves and resources).

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:

It is the most prevalent currency in popular pairs.
It is the world’s second-largest trading nation after China.
Some smaller countries peg their own currencies’ value to that of the US dollar.
The live price of gold and other popularly traded commodities is often set in US dollars.
Crude oil is primarily priced and traded in US dollars globally, which supports the USD’s central role in FX markets.
It is considered the world’s reserve currency and is used to settle a huge portion of international transactions (the BIS estimates that the US dollar is on one side of 89.2% of forex trades).
Giant global banks will hold a substantial percentage of currency reserves in US dollars. Official reserves are reported by currency in the IMF COFER data on reserve currency composition.
The US is a significant world player in petroleum, automobile production, aerospace, construction, electronics, telecommunications, plus construction and agricultural machinery.

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:

Retail Sales
Trade Balance
Non-farm payrolls
ISM Manufacturing
Producer Price Index
Industrial Production
Consumer Price Index
ISM Non-Manufacturing
Federal Reserve Minutes

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?

GBP/USD activity is often highest during the London–New York overlap (roughly 13:00–17:00 UK time, adjusting for daylight saving). Outside overlaps, liquidity can be thinner and spreads can widen.

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, and 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?

GBP/USD daily range varies significantly by market regime. You can estimate typical movement using ATR (Average True Range) on Bank of England daily GBP/USD spot rates (or the Federal Reserve H.10 historical GBP/USD rates) over your chosen lookback period.

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.

Why Is The GBP/USD So Popular?

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.