Can EURGBP move independently of GBPUSD and EURUSD?

Is it possible for EURUSD and GBPUSD to have no price change at the same instant as EURGBP increases?

One of them can stay fixed, but not both of them at the same time.

At any given moment, when one of these three pairs moves, at least one more from them must move.

Of course, this is just theory Depends on broker, and other issues

So the three currencies are algebraically linked, correct?

EURGBP = EURUSD/GBPUSD ?

If so, then what exactly does triangle arbitrage try to exploit?

Check out this thread-
http://www.forexfactory.com/showthre...91#post1796191

There are 'things' to try... but they basically make you assume directional risk at some point in time when closing a side in profit... and the spreads become costly.

Well lets think about it.

Lets say EUR/USD and GBP/USD wil stay flat. Then lets say EUR/GBP will go up 70 pips or so. Then lets assume that USD is Flat/neutral across the board.

EUR/GBP going up 70 pips means people are buying EUR's by dumping GBP's, meaning that it will tend to put selling pressure on gbp/usd and buying pressure on eur/usd all else being equal. It's called cross pair flows. Now if EUR/GBP goes on uptrend for a few hundred pips you should definitely see it in the price action as rallies in GBP/USD get capped, and support levels get broken more easier than EUR/USD, and in EUR/USD resistance get broken more easily, and support is present more easily. It also depends what the dollar is doing.

As for the triangular arbitrage stuff I would have to think about that a bit more.

Do you really think this is possible??!!!

EURGBP = EURUSD / GBPUSD

It has to be like that. If EURUSD and GBPUSD stay the same, then EURGBP must stay the same. If it moved a considerable amount, then there is an arbitrage opportunity and will soon be closed out by market players.

Just try to do the math and make a numerical example and check out yourself and you will see that it can't be possible.

Best Regards,

Nader

Are you saying that "they can move independently but it will create an arbitrage opportunity that will normalize the price immediately" or are you saying "they cannot move independently?" That is the essence of my question.

Sorry, I'm not super bright with this. It makes sense to me that if both EUR and GBP are neutral against USD they'd remain flat, but why does that necessarily mean they're neutral against each other?

USD is the big dog, so if there's nothing fundamentally driving it up or down against EUR and GBP, that doesn't mean there's nothing fundamentally driving EUR up or down against GBP.