Some Tips About The EURGBP
A Look At Some Of The Key Aspects And Influences For EURGBP.
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We have a question from Janko and Dean about the EURGBP, with Janko asking about its risk sensitivity saying sometimes the pair moves against risk flows other times in line with risk flows, and Dean asking about the correlation that EURGBP has on something like the GBPUSD.
Thanks for the question’s guys, we can tackle each of them in order.
Firstly, from a risk point of view, the Pound is a more volatile mover compared to the Euro, and recently as example has been resembling moves as an emerging market currency, and the Euro, with its low interest rates have been known as a carry against higher yielding currencies like the MXN or RUB or ZAR as an example.
So, in that sense, sometime the Euro can exhibit safe-haven like moves and the Pound high-beta like moves, which means sometimes the EURGBP moves higher on risk-off flows and moves lower on risk-on flows, however this correlation is far from perfect and is good to keep in the back of your mind but not something that would necessarily be a good reason to trade the pair.
There is other uses for the pair however, due to its composition, with the Euro being the second most traded currency and the GBP being the fourth most traded currency there is lots of liquidity in the pair, and when there are strong moves to the upside or to the downside in the EURGBP we can usually expect an inverse reaction in something like the GBPUSD.
So, taking a look at this chart, this is the EURGBP in gold and the GBPUSD overlay on top in blue, if we zoom out we can notice an inverse correlation between the two, now like most correlations this isn’t perfect by any means, but you will be surprised how often excessive moves in the EURGBP can affect the GBPUSD.
Thus, one way to use this as a gauge is to keep track of any major fundamentals shifts in the EURGBP, as any big moves should see meaningful reaction in the GBPUSD.
Of course, that doesn’t mean you abandon all your other analysis and only look for opposite moves in these two, that will drive you crazy and cost you money, it only means it’s good to have it on your radar whenever you are planning to trade the GBPUSD.
So, hope that helps guys, any other questions don’t hesitate to let us know.
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If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
----
We interpret and explain price moves in real-time, 24 hours a day. Our team of analysts produce text, video and audio commentary.
You understand the markets and trade with confidence. Learn more at our website here: https://bit.ly/2HFykNd
-----
We have a question from Janko and Dean about the EURGBP, with Janko asking about its risk sensitivity saying sometimes the pair moves against risk flows other times in line with risk flows, and Dean asking about the correlation that EURGBP has on something like the GBPUSD.
Thanks for the question’s guys, we can tackle each of them in order.
Firstly, from a risk point of view, the Pound is a more volatile mover compared to the Euro, and recently as example has been resembling moves as an emerging market currency, and the Euro, with its low interest rates have been known as a carry against higher yielding currencies like the MXN or RUB or ZAR as an example.
So, in that sense, sometime the Euro can exhibit safe-haven like moves and the Pound high-beta like moves, which means sometimes the EURGBP moves higher on risk-off flows and moves lower on risk-on flows, however this correlation is far from perfect and is good to keep in the back of your mind but not something that would necessarily be a good reason to trade the pair.
There is other uses for the pair however, due to its composition, with the Euro being the second most traded currency and the GBP being the fourth most traded currency there is lots of liquidity in the pair, and when there are strong moves to the upside or to the downside in the EURGBP we can usually expect an inverse reaction in something like the GBPUSD.
So, taking a look at this chart, this is the EURGBP in gold and the GBPUSD overlay on top in blue, if we zoom out we can notice an inverse correlation between the two, now like most correlations this isn’t perfect by any means, but you will be surprised how often excessive moves in the EURGBP can affect the GBPUSD.
Thus, one way to use this as a gauge is to keep track of any major fundamentals shifts in the EURGBP, as any big moves should see meaningful reaction in the GBPUSD.
Of course, that doesn’t mean you abandon all your other analysis and only look for opposite moves in these two, that will drive you crazy and cost you money, it only means it’s good to have it on your radar whenever you are planning to trade the GBPUSD.
So, hope that helps guys, any other questions don’t hesitate to let us know.
-----
If you find this content helpful, you’ll love Forex Source.
There’s a link below were you can learn more about it
https://bit.ly/2HFykNd
