In 1858 a transatlantic steel cable was laid between the US and the UK, the cable was used to transmit telegraph messages between the two nations, one of the messages that was regularly relayed was the currency exchange rate for the Dollar and the Pound.
These days, those exchange rates are transmitted via satellites and various fiber optic cables, but for reasons unknown, the name seems to have stuck, so when referring to trades in GBP-USD one would normally refer to that currency pair as “the cable” or “cable”.
As with most currency trades, the Pound will have the upper hand in this specific pairing, usually trading in the area of $1.5 per £1, such a substantial difference between two of the most powerful currencies can result in massive shifts which can be somewhat risky, however, if one can “read” the market properly, those very same shifts can result in great winnings.
While the Dollar/Pound pairing does not quite measure up to the great liquidity that Euro/Dollar trades may offer it does offer other opportunities, the Pound itself is less affected by global events, or even European events as the UK is not a part of the Eurozone, so it has avoided and continues to avoid most of the financial issues and debt crisis that still haunt Europe.
The UK economy itself is considered to be quite durable and strong, second only to that of Germany, however, there are signs showing the UK is slipping into at least some sort of a recession.
Sure, the word “recession” itself is enough to send even the most experienced of traders into a fetal position, and if that wasn’t enough, the UK also has quite a bit of debt load on its hands, these two factors sound quite intimidating and might deter you from trading in GBP/USD binary options, however, there are other factors in play, which, if carefully considered may help you along the path to great profit.
The pound is considered to be quite sensitive to any major announcements from the bank of England, so any notices of rate changes, if read in time can be turned around to substantial profits.
Much in the same way, the Dollar is sensitive to any major economic news out of the US, so one should pay attention to reports on the GDP, unemployment rates retail sales and amongst the primary indicators of market movements, but just as before, if you can “read” these movements you can avoid any pitfalls.
If you feel you have the understanding required to trade in this currency pair, you would do well to stay tuned to various news outlets around the time when any monthly report on either side of the pond is made.
Listening to news regarding these reports is your way to succeed, if unemployment is down in the US, it may very well cause the Dollar to strengthen its position versus the pound, where as a decrease in the UK’s debt load will likely cause an increase in the Pound’s power.
Stay tuned to the news, make quick moves while reading the market correctly and the next information across the “cable” will be of the money you’ve just made.