Why does the GBP/USD have so much more Velocity than the other majors? | Forex Factory

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Why does the GBP/USD have so much more Velocity than the other majors?

  • #1
  • First Post: Dec 13, 2006 12:08pm Dec 13, 2006 12:08pm
I've just been wondering why GBP/USD has always had so much more velocity than the other majors. It's been my expirence that the more exotic a pair, the less people trade it and the more it's velocity. But GBP/USD is not an exotic, and it's big movements seem to attrack more and more traders everyday. So...why does it still move so much?
  • #2
  • Dec 13, 2006 12:43pm Dec 13, 2006 12:43pm
Quoting aicccia
I've just been wondering why GBP/USD has always had so much more velocity than the other majors. It's been my expirence that the more exotic a pair, the less people trade it and the more it's velocity. But GBP/USD is not an exotic, and it's big movements seem to attrack more and more traders everyday. So...why does it still move so much?
GBP in general on all pairs moves rapidly because of its value vs. other currencies. Since it is worth more than any other currency, any move in its value creates for fast changes against its pairing. It's just mathematics. When you buy 1 lot of GBP/USD its not worth 100,000, but 197,000 +-. So your money moves twice as fast since you've invested twice as much.

GBP/JPY is even faster. Look at how much it can move!

Hope that helps

GF
  • #3
  • Dec 13, 2006 1:10pm Dec 13, 2006 1:10pm
The above is true. A 1% move in GBP/USD is about 196 pips, whereas a 1% move in EUR/USD is only 132 pips. The ratio of the two is 1.485 to 1.

Also, the volume of GBP traded against USD is much less than EUR vs USD, so the impact of all the trading decisions on the price tends to be larger. This causes a more volatile and spiky pattern of movement on the GBP/USD, making its movements larger and more challenging to predict accurately. It is not unusual for GBP/USD to move twice as many pips as EUR/USD, however the opposite occasionally occurs also.
  • #4
  • Dec 13, 2006 1:41pm Dec 13, 2006 1:41pm
Quoting itme
The above is true. A 1% move in GBP/USD is about 196 pips, whereas a 1% move in EUR/USD is only 132 pips. The ratio of the two is 1.485 to 1.
Exactly. In percentage terms GBP/USD is NOT much more volatile than EUR/USD. The daily Average True Range of EUR/USD is currently 91 and of GBP/USD is 136 which in both cases is about 0.7%.
  • #5
  • Dec 13, 2006 1:45pm Dec 13, 2006 1:45pm
i read somewhere that the pounds movement makes up 20% of the total market. and that england is a stable country. time tested political system a solid economy means a steady movable currency. unlike the euro which is a complilation of several countries.
  • #6
  • Dec 13, 2006 2:25pm Dec 13, 2006 2:25pm
GBP makes a good trading tool thanks to this, but Watch the EUR/USD for signs.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #7
  • Last Post: Jan 23, 2012 6:30pm Jan 23, 2012 6:30pm
Quoting notouch
Exactly. In percentage terms GBP/USD is NOT much more volatile than EUR/USD. The daily Average True Range of EUR/USD is currently 91 and of GBP/USD is 136 which in both cases is about 0.7%.
Interesting to see how the numbers have changed!

Even "the beast" has been tamed somewhat!

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