How to Trade GBP/USD - Strategies, Platforms & Tools

Jitanchandra Solanki
35 Min read

If you want to learn how to trade GBP/USD then you are in the right place! The United Kingdom is the fifth-largest economy in the world, while the United States is the largest. These dynamics make trading GBP/USD essential for foreign exchange traders.

With the Bank of England starting to increase interest in 2022 and the UK government tax-cutting policies causing significant volatility in the British pound and UK gilts - now could also be one of the best times in history to learn how to trade the GBP vs USD exchange rate. 

In this article, you will discover the history of GBP/USD, how the GBP/USD exchange rate works, the best time to trade GBP/USD, the different types of trading accounts for pound/dollar trading, top GBP/USD technical analysis tools to use and GBP/USD trading strategy you can start trading with right away!

How Does GBP/USD Trading Work?

When trading GBPUSD, the British pound is called the base currency and the US dollar is called the terms currency. The quote of the currency pair shows the number of US dollars needed to buy one British pound.

For example, let's say the GBP/USD exchange rate reads 1.2500.

  1. If buying GBPUSD, the quote shows how many units of the terms currency is needed to buy one unit of the base currency. So, in this example, you need to have 1.25 USD to buy 1 GBP.
  2. If selling GBPUSD, the quote shows how many units of the terms currency you get for selling one unit of the base currency. In the example above, you will receive 1.25 USD when you sell 1 GBP. So how does this work for Forex traders?

When it comes to trading Forex and the British pound to US dollar exchange rate your Forex broker will quote two prices for the GBP/USD, such as:

In the GBP/USD quote above, there is a bid price and ask price whose levels will constantly fluctuate. A unit of measurement in the GBP/USD quote is called a pip, which is 0.0001 of the quoted price. If the bid price moves from 1.27366 to 1.27376, this is a one pip move.

The difference between the bid and ask price is called the spread. In the example above the spread is actually less than one pip (1.27366 - 1.27373 = 0.00007, using 0.0001 Forex pip measurement means this is 0.7 pips). The last digit in the quote is used by trading robots for precision pricing.

The spread value is one cost of trading. If you buy at the ask price of 1.27373 and immediately sell without any price movement, you would lose 0.7 pips as you would have sold at the bid price of 1.27366. Therefore, the market needs to go more than 0.7 pips higher before you can close out at the bid price at a profit.

The best spreads when trading GBPUSD are usually found during the best hours to trade the GBP/USD and on certain advanced trading accounts provided by Admirals such as the Zero.MT4 account type - all of which are discussed further in the article.

Let's take a look at two possible trading scenarios, remembering that the ask price is a trader's buy price and the bid price is a trader's sell price, with an average spread of one pip and from the Admirals Trade.MT4 or Trade.MT5 account which is commission-free to buy or sell currency pairs:

Trading GBPUSD - Rising Exchange Rate

If the trader buys at the ask price of 1.2737 and the GBP/USD quote moves to 1.2757 Bid / 1.2758 Ask, then the trader can exit at the bid price (the sell price) of 1.2757. This means the trader would have made 20 pips profit (1.2737 - 1.2757).

However, if the market went from 1.2737 back down to 1.2717 Bid / 1.2718 Ask, the trader will have lost 20 pips (1.2737 - 1.2717).

Trading GBPUSD - Falling Exchange Rate

Forex traders can also profit from a falling market by initiating a sell, or short trade. For example, let's say the trader short sells at 1.2736 and the British pound fell against the US dollar producing a new GBP/USD quote of 1.2715 Bid / 1.2716 Ask.

The trader can exit their trade at the ask price (the buy price) of 1.2716. This means the trader would have made 20 pips profit (1.2736 - 1.2716), as they shorted the GBP/USD predicting the market would go lower. This is possible with contracts for differences or CFDs which allow you to profit from rising and falling markets. 

However, if the market went from their entry price of 1.2736 up to 1.2755 Bid / 1.2756 Ask, the trader will have lost 20 pips (1.2736 - 1.2756), as they shorted the currency pair expecting the pound to fall against the US dollar but it went higher instead.

The next question for many aspiring traders then is what moves the GBP to USD exchange rate? Many traders believe that if they monitor the different influences on the GBP/USD exchange rate it can help in forecasting whether the currency pair will rise or fall. When building a GBPUSD trading strategy, most traders would use technical analysis along with fundamentals as you will learn further in this guide. 

If you are asking yourself the question should I buy or sell GBP/USD, then you can test out both theories using a demo trading account. This allows you to trade in a virtual environment until you are ready to go live. 

You can open a FREE demo trading account below... 

Trade with a risk-free demo account

Practise trading with virtual funds


What Creates Volatility in the GBP/USD?

As the United Kingdom is such a large trading nation, there are many factors which influence the price of the GBP vs USD live price. International demand for the British pound, central bank policy, and political tensions all play a big part. Here are a few key fundamental and economic indicators to take into account:

  • The UK and US Economy - International demand for a currency will move toward economies that are strong and growing. Therefore, when the UK economy is looking strong and the US economy is looking weak, this could lead to a rise in the GBP/USD exchange rate and vice versa.
  • Bank of England (BoE) Policy - The UK's central bank meets once a month to release the Bank of England Monetary Policy Summary report which details the reasons why the members of the bank have decided to either cut interest rates or increase interest rates or keep them on hold. Typically, a currency will fall on the threat of interest rate cuts and rise on the optimism of rising interest rates - in a normal economic environment.
  • Politics and Government - Political events can cause huge movements in a currency as we saw by the collapse of the British pound to US dollar exchange rate after the UK's vote to leave the EU called Brexit. Government elections and a change in political parties can also have a huge impact on the GBP/USD price. For example, voted-in prime minister Liz Truss and her Chancellor Kwasi Karteng of the Tory Party sent the British pound tumbling to 37-year lows against the US dollar after a mini-budget announcement in September 2022 which markets took as a negative. 
  • Economic Data - While the above events can affect the long-term trends of the market, there are smaller economic data announcements that influence the pound vs USD in the short term. These are economic announcements such as retail sales, inflation, employment figures and other GBP USD news.

How to Trade GBPUSD Forex News

Many short-term traders like to day trade the GBP/USD around high-impact news announcements to try and capture the volatility these news items may provide. Longer-term traders also like to track news announcements that can impact trading GBP USD to identify any trends in good or bad economic data.

You will learn more about GBP/USD trading strategies further down this guide.

How do you access an economic calendar so you can know about upcoming, potentially market-moving news announcements? One of the best ways is to use the Premium Analytics feature exclusively for Admirals users.

First, you will need to open a live or demo trading account.

Once you have opened your Admirals account visit the homepage and select Premium Analytics from the Analytics tab. Once logged in, expand the Economic Calendar found on the bottom left. You can use the Advanced Filter option to only list economic news items for the United Kingdom and the United States as these are the most likely to affect the GBP/USD.

Source: Admirals Premium Analytics, 10 May 2022

From here we can view all the upcoming news items that are likely to affect the GBP/USD exchange rate price. Clicking on each of these will give you an explanation of what the news item is at the bottom left as well as what analysts are forecasting for the result. You can also find the latest GBPUSD news which is powered by Dow Jones.

There are also a lot more features in the Premium Analytics and the Admirals homepage that can help you in your trading decisions such as a Fundamental Analysis and Technical Analysis section, along with a Trader's Blog. Now you are armed with some of the most powerful tools in the business, the next step is to make sure you have the right trading account set up.

Once you have your trading account setup, it will allow you to follow the other tips in this article, including following the GBP/USD trading strategy, using GBP/USD technical analysis and following the tutorial on how to buy and sell the GBP/USD.

Free analytical tools

Tap into a wealth of exclusive resources at the touch of a button


What is the Best GBP/USD Trading Account?

Picking the best trading account for GBP/USD trading is a very important decision. With Admirals, there are four popular accounts types for trading the British pound US dollar exchange rate. These are:

The Trade.MT4 and Trade.MT5 Trading Account

The Trade.MT4 and Trade.MT5 trading account is a popular option for trading the GBP/USD on MetaTrader 4 (MT4) or MetaTrader 5 (MT5) - the world's most popular trading platforms. Here are some more details:

  • Minimum deposit: 100 EUR / USD / GBP / CHF
  • Account balance currencies: EUR, GBP, USD, and more
  • Markets available: Forex, Indices, Commodities, Stock, ETF, Future CFDs
  • Spreads: GBP/USD minimum spread 0.1 pip, typical spread 1 pip
  • Commissions: Commission free, apart from Stock and ETF CFDs
  • Platforms: MetaTrader 4, MetaTrader 5, MetaTrader Web Trader, MetaTrader Mobile Trading, Admirals Trading App

The Zero.MT4 and Zero.MT5 Trading Account

The Zero.MT4 and Zero.MT5 accounts are unique offerings for those who want to elevate their trading level on the GBP/USD in MT4 or MT5. The account is based on Admirals' own STP technology so traders can trade directly with top-tier liquidity providers. Access to this advanced offering also comes with additional benefits:

  • Minimum deposit: 100 EUR / USD / GBP / CHF
  • Account balance currencies: EUR, GBP, USD and more
  • Markets available: Currencies, including the GBP/USD-ECN
  • Spreads: GBP/USD minimum spread 0.1 pip, typical spread 0.6 pips
  • Commissions: GBP/USD 3 USD per 1 lot (100,000 units of currency) per side
  • 200 maximum open orders in Zero.MT4, and 500 in Zero.MT5
  • Platform: MetaTrader 4, MetaTrader 5, MetaTrader Web Trader, MetaTrader Mobile Trading

One of the major differences with the Zero accounts relative to the Trade accounts is the fact the spreads start from 0 pips with an additional commission charge per lot, or 100,000 units of currency traded. With this account, you can also trade inside the spread value with no requirements on minimum volume (order can start from just 0.01 lot).

The lower cost of spread, lightning-fast execution and ability to trade in the interbank market makes this the go-to platform for serious Forex traders.

The World's Premier Multi Asset Platform


GBP/USD Technical Analysis: When to Buy or Sell GBP/USD?

So far, you have learnt that the GBP/USD exchange rate moves in pips and the major factors that influence the movement of the currency pair. Now that you also have access to one of the best trading accounts for Forex traders, as listed in the previous section, we can now focus on identifying the best time to trade the GBP/USD before going through how to buy and sell the currency pair in your trading platform.

Let's start by looking at a recent daily chart of GBP to USD:

Disclaimer: Charts for financial instruments in this article are for illustrative purposes and does not constitute trading advice or a solicitation to buy or sell any financial instrument provided by Admirals (CFDs, ETFs, Shares). Past performance is not necessarily an indication of future performance.

Traders will often use technical analysis to analyse the information on the chart. Essentially, a GBP/USD technical analysis process will involve looking at previous price action patterns and cycles to help determine what could happen next. Often, traders will also use trading indicators to help in their decision-making process of what is happening in the currency pair at the current moment in time and what could happen in the future.

Traders who have downloaded the free Admirals MetaTrader Supreme Edition have an edge in using advanced tools to help with their GBP/USD technical analysis. Here are just a few tools that could prove to be effective:

Trading GBP/USD - MetaTrader Supreme Edition Symbol Info Indicator

Source: Admirals MetaTrader Supreme Edition, 10 May 2022

A powerful GBP/USD indicator is the Admirals Symbol Info indicator. To put this on a chart in MetaTrader, first, download the Admirals' MetaTrader Supreme Edition plugin

Once this has been downloaded, open your platform and follow the steps below to gain access to the Admiral Symbol Info indicator:

  1. Select the Trade Navigator window (Ctrl+N) which will open a side window on the left side of the chart.
  2. Find 'Admiral Symbol Info' in the window under Indicators -> Examples.
  3. Select the indicator by dragging and dropping on to the chart.
  4. Select Chart -> Indicators List -> Admiral Symbol Info if you would like to customise any settings.
Source: Admiral Symbol Info Indicator, MetaTrader Supreme Edition

In the settings above, it has been customised to quickly tell the trader where each of the different timeframes (Weekly, Daily, H4, H1, M30, M15, M5 and M1) are trading relative to a specific indicator. In this instance, they are:

  • EMA - Exponential Moving Averages
  • MACD - Moving Average Convergence Divergence
  • AO - Awesome Oscillator
  • PSAR - Parabolic SAR
  • CCI - Commodity Channel Index

So how can GBP/USD traders use this to their advantage? Well, the first line in the Admiral Symbol Info indicator is the EMA14. As it has a red circle under the W1, D1, H4, H1, M30, M15 it means that the price on each of those timeframes is below its respective 14-period exponential moving average (EMA) on those timeframes. The only blue circles are under the M1 and M5 timeframes which means that price is above the 14-period EMA on those timeframes.

When a market is trading below the EMA14 it is often seen as a bearish sign. This means that, in this example, the British pound to US dollar exchange rate is bearish on six different timeframes suggesting the pound is much weaker than the dollar.

The Admiral Symbol Info is very useful in giving the trader quick information on the bullish, or bearishness of the GBP/USD on multiple timeframes and across multiple indicators.

The MetaTrader Supreme Edition comes with even more additional trading indicators you can use, such as:

  • Technical Insight Lookup indicator which will find potential trading ideas for you
  • Global opinion widgets so you can track the sentiment of different markets
  • A mini-terminal which allows for advanced trading order functionality
  • Real-time news indicators directly into the platform
  • Advanced indicator package which includes:
    • Pivot points
    • Renko charts
    • Chart group
    • Symbol info and many more!

Get all of this and much more by clicking the banner below and starting your FREE download!

The exclusive MetaTrader Supreme Edition

Download the most powerful plugin suite for your favourite trading platform!


How to Buy and Sell GBP/USD

There are multiple ways to buy and sell the GBP/USD using the Admirals MetaTrader platform. Advanced traders may use the 'one-click trading' function which - at just one click of a button - a trader can be in a live trade on the GBP/USD. However, to learn how to trade the GBP/USD, using orders may be the best place to start.

GBP/USD Live Trading Ticket

Source: Admirals MetaTrader 5 Supreme Edition, 10 May 2022

Start trading GBP USD following these steps:

  1. Analyse the market using technical analysis, or the parameters of a trading strategy and determine whether you believe the market will go higher (buying) or go lower (selling).
  2. Right-click, select Trading then New Order. Alternatively, press F9 on your keyboard and a GBP/USD live trading ticket will pop up.
  3. Enter Volume value. This is how many units of currency you want to trade. 1 lot = 100,000 units of currency. The lowest volume value is 0.01 lots.
  4. Enter Stop Loss value. A stop-loss is used to exit the trade at a predetermined price level to minimise losses if the market moves against you.
  5. Enter Take Profit value. A take-profit is used to exit the trade at a predetermined price level to maximise any gains and close out any profit.
  6. Click 'Buy at Market' or 'Sell at Market' depending on which direction you believe the market will go.
  7. You can view, amend or close your live trade through the Terminal window (Ctrl+T) where you will find all your live trades, pending orders and account history.

Trading GBP/USD Volatility and Daily Ranges

As there are many influences on the British pound US dollar exchange rate, the volatility of the currency pair can change significantly over time. GBP/USD volatility is evident by using the Average True Range (ATR) indicator.

Source: Admirals MetaTrader 5, GBP/USD, Weekly - Data range: from 16 June 2013 to 10 May 2022, accessed on 10 May 2022 at 11:36 am BST. - Please note: Past performance is not a reliable indicator of future results.

The ATR indicator shows the average range of the last fourteen bars for the timeframe displayed. It is clear to see the average range of each weekly bar shown above increased around the Brexit referendum announcement in 2016 and again around the coronavirus pandemic in 2020.

In fact, at the ATR's peak, the average weekly range for the GBP/USD was around 480 pips during 2016. The ATR indicator can also help identify the best hours to trade the GBP/USD.

Best Time to Trade GBP/USD - Check the ATR

Source: Admirals MetaTrader 5, GBP/USD, H1 - Data range: from 13 Apr 2022 to 10 May 2022, accessed on 10 May 2022 at 9:57 pm BST. - Please note: Past performance is not a reliable indicator of future results.

A common question among Forex traders is what is the best time to trade the GBP/USD? Usually, the best time is during the European session as that is when the UK market and traders are operating. However, the US session can also bring extra volume to the market as US traders start to operate as well.

In the hourly chart of the GBP/USD above, the ATR indicator continues to move around from peak to trough. This is because pound/dollar volatility is constantly changing as markets digest news items. However, traders may find the most amount of volatility occurs during major session opening hours and the least amount of volatility outside of these hours.

This is why many traders believe the best hours to trade the GBP/USD are during the opening hours of the major market sessions, even though you can trade the GBP/USD 24 hours a day, five days a week.

So what are the major session opening hours?

  • European session - 7am to 5pm GMT/BST
  • US session - 1pm to 9pm GMT/BST
  • Asia session - 12pm - 5am GMT/BST

A GBP/USD Trading Strategy Example

There are many popular types of trading strategies to trade the GBP/USD. The important part is to keep it simple and follow a process, rather than chasing the outcome you want, which can ultimately lead to building poor trading habits.

In order to keep it simple, let's use some well-known, popular tools to build the beginning of a possible GBP/USD price action trading strategy:

Source: Admirals MetaTrader 5, GBP/USD, Daily - Data range: from 21 Sep 2020 to 10 May 2022, accessed on 10 May 2022, at 10:10 pm BST. - Please note: Past performance is not a reliable indicator of future results.

The above daily chart of the GBP/USD shows a 34-period exponential moving average (34 EMA) plotted on price. To put this on your chart, select the Insert tab at the top of the chart, then Indicators, Trend and Moving Average.

Then in the popup box input a period of 34 and MA method of Exponential and a colour for the moving average line.

Moving average indicators are often used as a trend filter to quickly determine who is control of the market, buyers or sellers, thereby giving us a set of rules to start with:

  • Rule 1: Go long when the price is above the 34 EMA.
  • Rule 2: Go short when the price is below the 34 EMA.

Now we have a possible directional bias, how do we time a trade? This is where price action trading becomes useful. There are many patterns that can be used in price action trading, two of the most common candlestick patterns are 'the hammer' and 'shooting star'.

The hammer price action trading pattern, as shown above, is a bullish signal which signifies the failure of sellers to close the market at a new low and buyers surging back into the market, to close near the high.

The shooting star price action trading pattern, as shown above, is the opposite of the hammer pattern. It's a bearish signal which signifies the failure of buyers to close the market at a new high, and sellers surging back into the market, to close near the low.

We can now further elaborate on our rules:

  • Rule 1: Go long when the price is above the 34 EMA and hammer price action pattern is formed.
  • Rule 2: Go short when the price is below the 34 EMA and shooting start price action pattern is formed.
Source: Admirals MetaTrader 5, GBP/USD, H4 - Data range: from 27 Oct 2020 to 14 Dec 2020, accessed on 10 May 2022 at 10:15 pm BST. - Please note: Past performance is not a reliable indicator of future results.

The chart above highlights occurrences of rule one. In most cases, the market continued to trade in the direction of the moving average and price action pattern suggestion. There will be occasions where your chosen trading rules will be less effective and result in losing trades. This is why risk management and using a stop loss will prove to be beneficial in the long run.

This strategy has not been tested historically for its effectiveness, it merely serves as a starting point to build upon. Traders can take this one step further by experimenting with different moving average values, learning additional price action patterns in the Admirals Educational library, adjusting the timeframes and using the advanced tools from the MetaTrader Supreme Edition plugin.

While a GBP/USD trading strategy can prove to be effective it is also important to understand the bigger picture opportunities as well.

Advanced Trading Webinars

Discover the latest trading trends, get actionable strategies and enjoy complimentary tools.


History of the GBP/USD Exchange Rate

The GBP USD history is a long one, as rich and interesting as any currency pair you can name. The gold standard has governed a large portion of the historical forex rates between the two currencies. This isn't unique to Pound Sterling or the Dollar; the gold standard determined a wide range of historical foreign exchange rates. In fact, the modern concept of the GBP/USD exchange rate didn't really begin until the early 1970s, when both the US and the UK moved to float exchange rates.

Prior to 1971, the forex rate history of the Pound and other Allied nation currencies was effectively tied to the value of gold. This was one of many agreements established at the Bretton Woods Conference in 1944, an event that governed the Dollar to Pound exchange rate history for close to three decades.

GBP/USD History After Bretton Woods

After the fall of the Bretton Woods agreement, the GBP/USD currency conversion history took on a much more varied shape. In the 1980s alone, the forex currency pair saw historic volatility. There were a lot of factors affecting the exchange rate, but major moves can often be reduced to one or two predominant influences. If we look at 1985, we can see a number of interesting events:

  • The first British mobile phone call was made
  • British scientists conducting a survey in the Antarctic discovered a hole in the ozone layer
  • The miners' strike ended
  • GBP/USD reached 1.05

This is the lowest historical exchange rate for the pair, during a time when the rate had reached up to 2.44 not too long before. So what happened in the US Dollar to GBP exchange rate history to cause such a change over a span of just five years? Well, the 1980s began with the US economy in a long-standing state of malaise. Energy shortages and the rise of OPEC in the 1970s saw prices in general, and oil in particular, spiralling upwards.

Primarily, the scarcity of oil hindered the economy's output. This combination of stagnation and inflation (or stagflation), wasn't unique to the US, but inflation was especially steep and persistent there. The country also suffered from high unemployment and the aftermath of its war in Vietnam, while the Fed (Federal Reserve) failed to implement the changes to its monetary policy, which were necessary to address the high inflation.

Change at the Fed was on its way, though. In the summer of 1979, President Jimmy Carter appointed Paul Volcker as Chairman of the Federal Reserve. The changes didn't stop there: by 1981, Carter was gone and Ronald Reagan took the position. Along with him came 'Reaganomics'. One of the pillars of this new economic policy was high-interest rates to curb inflation. Under Volcker's leadership, the Fed hiked the federal funds rate by 20%.

This came with a cost: unemployment climbed above 10% amidst another recession, but inflation fell. Later, when inflation was back under control, the Fed was able to ease a little. This, combined with the expansive tax cuts and large military spending of the Reagan administration, eventually saw sectors of the economy booming, and the Dollar with it. By 1985, the US dollar had risen 50% against the other leading currencies of the period. International trade and foreign exchange rates are connected, of course.

The strength of the Dollar was a huge hindrance to the US industry, which was unable to price itself competitively against foreign competition. This led to the Plaza Accord: an orderly devaluation of the Dollar undertaken by the central banks of France, Germany, Japan, the US, and the UK. Central bank factors that affect exchange rates are not always as orderly as this, as we shall see.

GBP/USD Intervention: ERM and Black Wednesday

Despite governments moving to floating exchange rates in the early 1970s, certain governments intermittently intervened in the FX market, in order to variously defend or weaken their currencies, as the Plaza Accord shows. Countries with export-oriented economies, such as Japan, have been known to devalue their currencies in order to boost the export market.

The Bank of England (BoE) intervened heavily in the early 1990s. Its problems in intervention led to one of the most dramatic moves ever witnessed in the Pound to Dollar exchange rate history. The UK government was committed to maintaining the Pound's value against the German Deutschmark as part of the Exchange Rate Mechanism (ERM), and this led to the Bank of England propping up the value of Sterling. It did this by buying the currency and raising interest rates. But here's the kicker: at the time, the UK economy was enduring a recession. Raising interest rates was consequently an inappropriate monetary measure. Something had to give.

A large number of speculators, most notably George Soros, recognised the shaky position of the BoE and began shorting the pound. On Black Wednesday, 16 September 1992, Britain left the ERM and ditched the idea of supporting the Pound. Releasing the floodgates had a devastating impact on Sterling's value.

It sank 25% against the Dollar in a day, in one of the most dramatic moves ever seen in the pound to dollar history. The price continued to move lower all the way into early 1993. You can read more about this in our article discussing the Top Three Most Successful Forex Traders Ever.

Learn more about how to trade the foreign exchange market by registering for the FREE Forex 101 Trading Course

Forex 101

Master trading basics with industry experts


GBP/USD During the 2008 - 2009 Financial Crisis

The prelude to the global recession of 2008 and 2009 was the sub-prime crisis. The sub-prime crisis began to simmer in early 2007, reaching boiling point by the summer. By this time, it was clear that several major US financial institutions were in real trouble, but the global reach of the problem was not yet fully apparent.

Consequently, the GBP to Dollar exchange rate rose for much of 2007, a response to the seeming relative weakness of the US economy. This culminated in the GBP/USD reaching 2.1163 in November 2007, the highest level seen in the historical currency exchange rate since 1980.

Once the Bank of England realised the extent of the crisis, however, it was forced to make drastic changes from 2008 onward. By early 2010, the BoE had increased the ratio of its balance sheet relative to GDP almost threefold compared to pre-crisis levels, by 450 basis points to a record low of .5% before implementing quantitative easing.

Brexit hits the GBP/USD Exchange Rate

2016 brings us to the Brexit vote. We can see from the historical data from that period just how pronounced the effect of the leave vote was on the value of the Pound. The Brexit vote saw GBP breaching lows not seen in over 30 years of Forex historical data. In fact, it was the weakest the Pound-Dollar rate has been since the low from 1985. The crucial difference is that in the 1980s, it was more about Dollar strength, whereas the move in June 2016 was all about Sterling weakness.

There is still a great deal of uncertainty over Brexit. To some degree, there is still a question mark hanging over whether the UK will leave at all. It, therefore, illustrates the impact of positioning and market sentiment ahead of actual change in the fundamentals.

The Sterling Flash Crash

There was a steep move down that occurred in the markets on 7 October 2016. This was the so-called 'Sterling flash crash' that made all sorts of GBP/USD Forex news headlines. The Pound moved 6% lower against the Dollar in just a matter of minutes. The decline came at a tense time for the Pound, of course, with talks of a hard Brexit that might see the UK leave the single market.

The exact causes of the move are debatable. Some have suggested a domino effect of stops being hit, while others have surmised it was algorithmic trading gone wrong. The suddenness of the move, and the equally sudden recovery does suggest some element of automation at play, but there can be little doubt that the conditions were already in place to spook the market.

Perhaps the biggest lesson to take away from this is: is that there was no way to forecast the GBP/USD moving in this manner. Trading is about dealing with uncertainty. A large part of the skill is how you deal with the unexpected. This remarkable event shows how important it is to always maintain good money management. The best way to find out how you react to the vagaries of the market is to practice using a demo trading account. This allows you to trade real, live market prices, without risking a penny.

GBPUSD Outlook & Long-Term Forecast

2022 and beyond is set to be a historic turning point for trading GBPUSD and the overall currency market. This is because the year marked the beginning of interest rate hikes from central banks not seen since the 2008 financial recession. In particular, the British pound could be an interesting currency pair to watch as it navigates a challenging economic environment as an independent state no longer part of the European Union.  

The Bank of England started 2022 by increasing interest rates several times to levels not seen since the last financial recession. This came at a time when a cost of living crisis has squeezed the consumer due to higher energy bills and the effects of the pandemic. After a lengthy period of time with high inflation, many analysts fear the potential for stagflation and the Bank of England Governor also forecasted a potential recession in a speech in May 2022. 

However, after UK Prime Minister Boris Johnson was voted out of his own party due to a vote of no confidence, new prime minister Liz Truss and her Chancellor Kwasi Kwarteng caused a significant amount of volatility in the British pound in their 'mini-budget' announcement in September 2022. The tax cutting budget - in a time of high inflation, low growth and rising interest rates - was seen as a negative by the market causing GBPUSD to drop to 37 year lows. 

Many analysts are forecasting GBPUSD to reach parity in the future. This is a situation where 1 British pound equals 1 US dollar. 

Source: Admirals MetaTrader 5, GBP/USD, Monthly - Data range: from 1 Jun 2001 to 30 Sep 2022, accessed on 30 Sep 2022 at 10:30 pm BST. - Please note: Past performance is not a reliable indicator of future results.

For a GBP USD long term forecast, the monthly price chart provides a lot of valuable information. From analysing the GBP/USD technical analysis picture, you can in the chart above that the price action is trading in between two horizontal support and resistance levels from around 1.4215 and 1.2090. 

This has created a long-term trading range between 2016 and 2022 so far. In May 2021, the price rejected the top horizontal resistance line of the range and has been trending down ever since. This is because the US dollar was been the most favoured currency over this time due to the Fed increasing interest rates and the US dollar being a safe haven over the Russia-Ukraine conflict. 

The GBPUSD price fell through the major horizontal support level at 1.1925 in the middle to end of 2022. This was down to a strengthening US dollar caused by higher interest rates and a budget announcement from the UK government which caused a liquidity crisis in the pension industry. This forced the Bank of England to intervene to prop up the UK market. 

The next major test for GBPUSD is whether the trend will continue lower towards parity - a situation where 1 GBP equals 1 USD 

Learn more about the latest trends in the British pound vs US dollar currency pair by turning into the live Admirals webinars, hosted by professional traders. 

Free trading webinars

Tune into live webinars hosted by our trading experts


Why Trade GBP/USD with Admirals?

If you trade the pound dollar Forex pair with Admirals, you can:

✔️ Trade 24 hours a day, five days a week.

✔️ Use leverage of up to 1:500 for Professional clients and up to 1:30 for Retail clients.

✔️ Trade with a well-established, highly regulated company including regulation from the UK Financial Conduct Authority, Cyprus Securities and Exchange Commission, the Jordan Securities Commission and many others.

✔️ Access the fastest and most secure trading platforms from MetaTrader on desktop, web or mobile.

✔️ Trade with institutional grade spreads as low as 0 pips with Zero.MT4 and Zero.MT5 and connect directly with tier one liquidity providers.

✔️ Trade currencies, indices and commodity CFDs commission-free with competitive spreads and swaps. 

✔️ Access the Admirals MetaTrader Supreme Edition plugin for advanced trading tools such as the Sentiment Trader and Advanced Order functionality completely free!

✔️ Benefit from Admirals' negative balance protection policy for peace of mind.

If you're feeling inspired to start trading, or this article has provided some extra insight into your existing trading knowledge, you may be pleased to know that Admirals provides the ability to trade Forex and CFDs with a demo trading account. 

Click on the banner below to open your FREE demo trading account today and trade in a virtual environment until you are ready to go live. 

Risk Free Demo Account

Register for a Free Online Demo Account and Master Your Trading Strategy


About Admirals

Admirals is a multi-award winning, globally regulated Forex and CFD broker, offering trading on over 8,000 financial instruments via the world's most popular trading platforms: MetaTrader 4 and MetaTrader 5. Start trading today!

This material does not contain and should not be construed as containing investment advice, investment recommendations, an offer of or solicitation for any transactions in financial instruments. Please note that such trading analysis is not a reliable indicator for any current or future performance, as circumstances may change over time. Before making any investment decisions, you should seek advice from independent financial advisors to ensure you understand the risks.

Understanding the Meaning of Forex Spread
The Forex spread is a basic, but important, concept when it comes to trading. It should be a very familiar term to you if you trade on the Forex market regularly. If it is not, it is something that you must understand in order to become a successful trader. In this article, we will explain what a sp...
How to Find the Best CFD & Forex Brokers in 2023
Are you looking for CFD or Forex brokers but are unsure as to what details you should be looking out for? Whether you are a beginner or an experienced trader, we will go over everything you need to know in order to choose the best forex broker for you. From the types of accounts, the instruments ava...
Trade Using The Admirals Forex Calendar In Real-Time
Admirals' Forex Calendar allows you to follow the economic agenda in real time and, therefore, take into account fundamental events that tend to impact the markets.The stock market and Forex are driven by two main factors, technical aspects of the market and its fundamentals.That's why the majority...
View All