For most of the 1800s, before the outbreak of World War I, a pound was valued at a small fraction of less than $ 5. In exceptional cases, during the American Civil War, the pound temporarily rose to $ 10. Before World War I, more than 60% of world debt was in pounds sterling. The US dollar reached the beginning of the 1920s, and in 1944 with the concept of the Bretton Woods monetary system (the idea that the dollar would be tied to the price of gold and become an unofficial reserve of the world), the pound in dollars it was linked to £ 1: $ 4, 03.
In 1971, the pound became a floating currency, as the Bretton Woods system slowly collapsed. At the same time, the US dollar began to fluctuate, and the US decided to abandon the gold standard.
As a rule, since the pound was allowed to float freely about the dollar, the nominal value of the pound depreciated over time, which led people to believe that the pound was gradually weakening. However, given inflation, you get a slightly different picture. Studies conducted by Professor Elra Dimson, Professor Paul Marsh and Dr. Mike Staunton of the London Business School show that, after World War II, mating in real terms has not changed.
In recent history, there are two cases where GBP/USD collapsed, which means that the pound depreciated against the dollar, or the dollar rose against the pound. Many factors will affect both currencies in general and concerning each other in the long run. Changes in: GDP, employment, interest rates, inflation, and political changes in the national economy, respectively, will be reflected in the corresponding currency.
Monetary policy is one of the most critical factors affecting the GBP/USD pair. Communication from both central banks may be one of the main factors determining the value of a currency pair. The British Bank of England revises the interest rate every month, while the US Federal Reserve revises the rates eight times a year. The specific factor for the pound at the moment is Brexit. Britain’s relationship with the EU, whatever it is, will have a significant impact in the next decade.
Theoretically, you can exchange currency pairs 24 hours a day, seven days a week, but there are better times for trading GBP/USD when a currency pair is more volatile. GBP/USD is usually occupied from 06:00 to 16:00 (GMT).
GBP/USD is one of the four “main” currency markets – the main ones are the currency pairs with the highest daily turnover. Plus, of course, this is one of the oldest currency pairs on the market. A person can trade GBP/USD under a Forex contract or can purchase a CFD for a particular currency pair and speculate on the price difference.
A CFD is a financial instrument, usually between a broker and an investor, when one party agrees to pay the other the difference in the value of collateral between the beginning and the end of the transaction. You can hold a long position (provided that the price goes up) or a short position (provided that the price goes down). This is considered a short-term investment or transaction because CFDs are usually used for a limited period.
For example, to trade GBP/USD using CFDs, you are thinking about the direction of underlying assets. If you feel that the pound will grow, open a long position by buying CFDs. If you believe the pound will lose its value against us dollar, you will open a short position by selling CFDs.