Order British pound : The British pound is the currency of the United Kingdom and is one of the main currencies used by banks around the world and therefore, it is also referred to as a major currency. Actually The pound sterling, as it is commonly referred to, is one of the the oldest currency in the world, dating back to the 8th century. It is the fourth most traded currency in foreign exchange markets and also holds value as the third most held reserve currency in most of the world’s foreign exchange reserves.
Futures contracts on the British pound have been traded since 1975 and are part of the currency futures category. Price for British pound futures are based on the US dollar and futures contracts track the underlying asset, which is the spot exchange rate of the currency pair GBPUSD. Traders are able to manage British Pound futures trading risk by hedging or speculating on price volatility. IN British pound futures, base currency is pound sterling while the listing currency is the US dollar. So the price on British pound futures represents the value of 1 British pound to US dollar. The future of the British pound can be pay in cash or even for physical delivery. However, for day traders, futures contracts are settled for cash contracts are automatically concluded before the last one business day.
Order British pound futures are standardized contracts and cleared through the CME exchange. You can also trade with the British pound futures on the ICE or Eurex exchange, which has a similar contract specification to that from the CME Group but in terms of volume, the volume of exchange in the CME for British pound futures is much higher than volume z ICE listed futures on the British pound.
While the pound sterling was a relatively trendy currency t o t r a d e a g a i n s t t h e U . S d o l l a r , r e c e n t p o l i t i c a l developments in the country kept the currency very unstable. For speculators, this volatility is good short-term trading opportunities in the markets. With low intraday margin requirements for trading in the British pound, traders can easily access currency markets and trade.
British pound futures. In order to trade effectively with the British pound futures, here are six key things you should know.
#1. British pound futures contract types
British pound futures are standardized contracts with each contract size 62,500 British pounds. There are many of them different types of contracts for British pounds ranging from standard contract and e-micro futures contract. However, when you compare the volume, standard British The pound futures contract clearly stands head and shoulders above e-micro futures contracts. On average, the standard British pound has a futures contract average value of 150,000 contracts per day. That high the level of liquidity ensures that day traders can trade British pound futures relatively easy without affecting prices or liquidity.
#2. British pound futures contract
As with all futures contracts, traders are required to enter into them performance bond or initial margin and have maintenance fringe. The CME futures group has a standard initial margin requirement or around $3950. However, for day traders, margin requirements are much lower, averaging around $500 or so depending on the futures broker you trade with.
#3. British pound futures prices
British pound futures are priced to 4 decimal places with GBP is the base currency and USD is the quote currency. British pound futures track prices spot GBPUSD fx markets that are traded over the counter. Prices are set daily based on the market price. Unlike spot FX markets where positions are often overnight attract positive or negative rollover swaps in futures British pound futures contracts automatically price in interest differentials. That’s why they exist there are no fees for overnight swaps or rollovers. With each tick (0.0001) represents $6.25 on the standard contract, a typical 100 pip move on British pound futures contract accounts for $625.00 or the entire movement of 1 cent is the equivalent of $6250.00
Due to the popularity of the British pound can be traded on at any time, although volatility is higher at the beginning the London trading session which is at 7am London time (GMT+1). Volatility decreases towards lunch, but then it rises as there is a good few hours of overlap with US trading session. It was during these periods that the British pound futures experience higher volatility.
#4. What makes the British pound
A favorite currency? Besides facts like one of the oldest currencies in the world and the main currency, the main reason the popularity of the British pound is its location. London is one of the major global business centers in the world and is one of the busiest and largest transaction centers where GBP is used as the main currency. As a floating exchange rate, GBP/USD, the underlying asset, is also attractive for traders on both sides of the Atlantic. The high liquidity of the currency pair makes this easier traders to buy or sell without any hassle. GBP/USD is referred to in business circles as cable. Name originated from the submarine cables that connected New York with London for the live quotes he earned that’s the cable’s nickname. Before the UK voted to leave the EU, London was considered a window to the European Union, which consists of 28 countries. For many it was as easy as transacting with London then he could transfer his services to the economy of 28 countries block. However, this is likely to change in the coming years although there are many unknowns as to whether the UK will still be able to maintain its financial trading role mushrooms in Europe. From a trading perspective, the British pound is familiar volatility and sharp price movements that make it ideal for intraday futures traders grab a few nuts from volatility.
#5. Economic factors influencing
Order British pound
In June 2016, the UK held a referendum on whether to continue EU membership or split up. The UK voted in favour leave EU membership, which sent markets into a of financial collapse before stabilization after efforts by the party Bank of England and political leaders. While the British pound is affected by regular factors like trade balance, economic growth and inflation, decisions on Breaking with the EU, also known as Brexit, was another an important factor when it comes to influencing exchange rate. In fact, right after the UK voted to leave the EU, the British The pound fell to a 30-year low. Since June, the British pound has have shown higher volatility than usual with Brexit underway talks that are likely to stretch into next year. Enter to remember that despite voting to end its membership of the EU,
The UK has not yet invoked the exit clause that is currently in place embroiled in legal hearings. Apart from Brexit on a day-to-day basis, central banks monetary policy plays a key role. Bank of England meets eleven times a year on Thursdays to review the economy and prepare markets for rate decisions. Central The bank’s decision-making committee consists of nine members of which five are employees of the bank consisting of the governor, three Deputy Governors and Chief Economist of the Central Bank. The the remaining four members are selected independent experts outside the bank. The British pound is prone to be volatile to any mischief remarks by any of the central bank policy members and very subject to comments from any of the three deputy governors and the central bank governor himself.
In order to place the British pound correctly futures, traders need to look at the weekly economic calendar in order to prepare for possible market movement events especially the speeches of the mentioned politicians. Except apparently environment, comments from government officials can also easily p o u n d t h e p o u n d . Unfortunately, most of these comments are unplanned it just adds to the importance that traders need to be extra cautious when trading British pound futures.
#6. Seasonal British Pound Futures tendencies
The British pound also follows a seasonal cycle with prices it starts to collect from around March to April earlier than usual peaking around August to September. After that The British pound starts to fall at the end of the year.Of course, this seasonality can be particularly contested after Brexit, which is likely to cause a blow seasonal trends of the British pound. For example, British pound futures have been steep this year declines in the period June to July after the Brexit vote, which was slightly earlier than the typical August peaks that are arising under normal circumstances. Futures on the British pound are among the most ideal, liquid ones currency futures you can trade. Because of the history behind it the British pound is one of the oldest and is a major currency pair, which means that traders can take advantage of the liquidity available to the GBP futures to successfully day trade futures contracts.
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