The base currency is the GBP while the USD is considered as a quote. The GBP/USD is the oldest traded currency. It’s known as Cable (or the cable), because during the mid-19th century a large cable was used to transmit the exchange rate between the pound and the US dollar across the Atlantic. The British government did not adopt the Euro as its main form of currency (just as many countries in the EU had), in order to have its own monetary policy independent from the European Union.
What Is the Spread of the GBP/USD?
Generally, the spread for the GBP/USD ranges from 0 to 3 pips, it varies from broker to broker. The lower the better, since it’s less costly to trade the GBP/USD. If you open a one lot position on GBP/USD with a spread of one pip, you will pay 8 GBP as a fee. However, if the spread is 3 pips, it will cost you 24 GBP instead of 8 GBP for one lot of GBP/USD.
Why is the GBP/USD known as “cable”?
The term Cable for GBP/USD dates back to the 19th century. In the late 1800s, the GBP/USD was transmitted across the Atlantic by a large submarine communications cable which ran across the ocean floor between the two countries transferring the exchange rate between the U.S. Dollar and the British pound. The exchange rate has since been referred to as Cable as a slang term used by forex traders.
The first Transatlantic Cable was laid under the Atlantic Ocean in 1858, but it failed after only about a month of fitful service. . The first such exchange rate to be published in The Times appeared in their issue of 10 August 1866.
Transatlantic communications are now mainly carried by optical fibre cables, supplemented to a small degree by satellites, but forex traders’ nickname for the pound-dollar pair still harks back to the old days of copper telegraph cables.
Which Types of Market News and Events Significantly Impact the GBP/USD?
The Federal Reserve or the Bank of England decisions impacting rates can significantly impact GBP/USD price volatility. You will see huge spikes on GBP/USD charts, as individuals and corporate traders adjust their positions according to the news.
What Is the Minimum Lot Requirement Needed to Trade This Pair?
Nano is the smallest lot that can be used to open a trade for the GBP/USD pair. If you use the MT4 platform, you should be able to input 0.0001 to open a nano position that is worth 100 currency units.