Why does NZD carry more weight in GBPNZD?

Hello,

Can somebody explain me why there is more weightage of NZD in GBPNZD pair? For example 1 pip move in gbpusd will not cause effect in gbpnzd pair but on the other hand 1 pip move in nzdusd will cause 3-4 pip move in gbpnzd why??

Hello superzeeshan:

Let's talk the following example:

1.0000 GBP = 1.0000 USD
1.0000 NZD = 1.0000 USD

thereforre, GBP/NZD is 1.0000, the weighing of GBP/USD and NZD/USD is equivalent

Now we have both GBP and NZD gaining 0.0001 pip again the USD:
1.0000 GBP = 1.0001 USD
1.0000 NZD = 1.0001 USD

therefore GBP/NZD rate will still be at 1.0000

Now the reality is that:

1.000 NZD = 0.6600 USD
1.000 GBP = 1.5600 USD
Cross GBP/NZD = 2.3636

You can see the weigtin is different so one move in of of those major will have an higher move in the Cross GBP/NZD

1 pip increase in the rate NZD/USD example:
1.000 NZD = 0.6601 USD
1.000 GBP = 1.5600 USD
Cross GBP/NZD = 2.3632

1 pips increase in the rate GBP/USD example:
1.000 NZD = 0.6600 USD
1.000 GBP = 1.5601 USD
Cross GBP/NZD = 2.3638


therefore a 1 pip move on the NZD/USD cross will have more impact than a 1pip move on the GBP/USD on the cross GBP/NZD

There is also something that I have noticed so be really careful:

I used to do some technical analysis on GBP/USD and NZD/USD and extrapolate it on a GBP/NZD chart.
- But I believe it might be a big error and it is better to draw your S&R, technical analysis directly on the GBP/NZD chart.

Thanks for showing me the calculation. It make sense now

Is there any indicator that shows in realtime that for example 1 pip move in NZD will cause X pip movement in GbpNZD? If you guys know please let me know