In 2016, oil prices fell to prices not seen in over a decade, and the Canadian dollar also suffered, slumping to an exchange rate of 1.46 CAD to 1 USD. Yen is considered to be held under a “dirty float” regime thanks to the Japanese government’s policy of active stability intervention. This means that the value of yen sees a number of daily fluctuations, but the central banks of Japan frequently buy and sell the currency en masse to keep exchange rates under control. This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result.
Graeme has help significant roles for both brokerages and technology platforms. You can still benefit if the market moves in your favour, or make a loss if it moves against you. However, with traditional trading you enter a contract to exchange the legal ownership of the individual shares or the commodities for money, and you own this until you sell it again. Meet other traders, research online and travel to understand the world. Don’t be afraid to invest in a currency in use halfway across the world.
GBP/USD is short for the British pound and U.S. dollar currency pair, or cross, showing how many U.S. dollars are needed to buy one British pound . No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. Although EUR/GBP is the exchange rate between two of the largest world economies – the Eurozone and the UK – it’s still only a minor pair because it doesn’t include the US dollar.
What are the most traded forex pairs in the world?
You can learn more about the standards we follow in producing accurate, unbiased content in oureditorial policy. The US dollar and the Canadian dollar have a strong correlation, due to being fiscal neighbours and important trading partners. More recently, the leading factor to monitor when trading the USD/CNY pair is US-China tensions, which have flared up for a number of reasons over the years. For example, in August 2022, US House Speaker Nancy Pelosi visited Taiwan, which caused Beijing to suspend US-China climate talks and cut off high-level military communication channels. Historically, the value of the yuan has been low compared to the US dollar because the Chinese government has artificially driven down the price to keep its exports competitive on the global market.
The major currency pairs comprise up to 75% of forex volume, which makes them easier to trade than minors and exotic pairs because they have the majority of buyers and sellers. Not surprisingly, all of these pairs contain the US dollar – due to the sheer size of the US economy. Known as “The Gopher”, this currency pair is one of the most popular pairs amongst traders. This means that traders can buy and sell the currency pair without experiencing significant fluctuations in the exchange rate.
GBP/USD: Trading the «Cable»
When a central bank raises interest rates, it can increase the value of a country’s currency, whereas lower interest rates can decrease the value of a country’s currency. They include currencies from the world’s largest and most stable economies — some popular pairs include EUR/USD, GBP/USD and USD/JPY. Major pairs are popular among beginner and expert traders due to the high liquidity and low spreads.
However, this currency pair is popular due to the strong reputation Switzerland holds as a safe haven. With a stable financial system and government, traders turn to the franc in times of economic uncertainty. Although it is less liquid than the other major pairs listed, it’s still a popular choice among traders. As you get started with forex swing trading, it’s important to watch a wide range of pairs so you can identify the best opportunities. If you limit yourself to monitoring only a few swing trading options, you’re likely to miss out on high-value trading opportunities. The third and final major commodity forex pairing, AUD/USD is heavily influenced by the precious metals and other exports leaving Australia and the international market for those commodities.
Traders should also be aware that many forex platforms will, by necessity, have larger buy-sell spreads on most currency pairs overnight. One of the advantages of foreign exchange trading is that unlike equity markets, the forex markets are open 24 hours a day, six days a week. At any time of the day or night, at least one of the three major currency markets – Asia, North America and Europe – is open for trading. 84% of retail investor accounts lose money when trading CFDs with this provider. Trading forex with a reputable broker is of the utmost importance when it comes to the forex market. Check out this list of top broker options to trade forex currency pairs.
And, despite the profit potential that swing trading offers in theory, it isn’t guaranteed to be more lucrative than trading strategies focused on long-term trends. As with the other currency pairs on this list, traders should keep an eye on any ECB and BoE announcements which could affect the exchange rates of the euro and the pound, which would increase volatility further. You can trade nearly 100 currency pairs with easyMarkets, including major, minor and exotic pairs.
Anderson is CPA, doctor of accounting, and an accounting and finance professor who has been working in the accounting and finance industries for more than 20 years. Her expertise covers a wide range of accounting, corporate finance, taxes, lending, and personal finance areas. But this means that in periods of economic stability, the CHF will often weaken in value when other currencies are appreciating. USD/JPY has also become a popular way of trading the relationship – or rather tensions – between the United States and Asian regions as competition heats up in areas such as technology and e-commerce. EUR/USD is a common trade for beginners because there’s usually a lot of information available online about the pair.
First, Understand These Forex Terms
But before you jump in headfirst to the fast-paced world offorex, you’ll need to know thecurrency pairsthat trade most often. The best currency pair for you will ultimately depend on your strategy and interest. But most traders stick to the currency pairs that have the most volume and liquidity – and therefore come with the most volatility. AUD/USD, often called the ‘Aussie’, makes up 5.4% of daily forex trades. It’s popular among traders as the value of AUD is highly correlated with the commodities, so creates a means for FX traders to get exposure to the market without trading futures contracts themselves.
If the British economy is growing at a faster rate than that of America, it is likely the pound will strengthen against the dollar. However, if the American economy is doing better than the British economy, the reverse is true. The high daily volume of EUR/USD transactions ensures that the pair has a lot of liquidity which generally results in tight spreads. Liquidity and tight spreads are enticing for traders because they mean that large trades can be made with little impact on the market.
The information provided herein is for general informational and educational purposes only. If such information is acted upon by you then this should be solely at your discretion and Valutrades will not be held accountable in any way. Ies unique in order to predict which currencies will rise and fall in value based on current economic or political climates. The brokerage is owned by Cedar LLC and based in St. Vincent and the Grenadines.
Political events can have a considerable bearing on the strength of currencies – Great Britain’s exit from the EU is an excellent example of this. This withdrawal created a lot of uncertainty surrounding the UK’s future economic prospects, which resulted in traders losing confidence in the pound. As a result, its value dropped significantly against other major currency pairs. USD/CAD is commonly called the ‘loonie’ on account of the loon bird which appears on Canadian dollar coins, and it represents the pairing of the US dollar and the Canadian dollar. In 2019, USD/CAD transactions made up 4.4% of daily forex trades.1 The strength of the Canadian dollar is closely linked to the price of oil because oil is Canada’s main export.
This currency pair is more volatile than “The Fiber” or “The Gopher”, due to the frequent price fluctuations it experiences. This volatility is preferred amongst certain traders as it creates the opportunity to create larger returns. For instance, a change in a country’s interest rate can impact the appreciation or depreciation of a currency pair.
Best Forex Currency Pairs to Trade
More recently, in September 2022, traders flocked to GBP/USD as the UK government and Bank of England battled to keep inflation under control, causing the pound to plummet to its lowest level since 1985. Based on your selection, you will register for an account with EF Worldwide Ltd, which is authorised and regulated by the Financial Services Authority of Seychelles . By continuing, you declare that you have read, understood and accept the Terms and Conditions and you agree to open an account with EF Worldwide Ltd. From the very beginning we have strived to offer our clients the most innovative products, tools and services.
Like NZD/USD, USD/CAD is considered a commodity pairing based on the large role oil plays in Canada’s gross domestic product as well as America’s heavy consumption of this commodity. As a result, USD/CAD often moves in correlation with the oil market, which can facilitate an easier evaluation of whether it’s one of the best forex pairs to trade for swing trading at any given time. As a major currency pair, EUR/JPY offers high liquidity that appeals to swing traders. But it’s also heavily influenced by broad market trends and sentiments. Current economic events in either Europe or Japan can have a direct impact on this forex pair, creating reliable technical indicators that swing traders can use to turn a profit.