Learn to trade EURGBP in binary options trading

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How to Trade the EUR/GBP in Binary Options

Updated on: 6 January 2020

The EUR/GBP is one of the most popular currency pairs in the world. And that is for the simple fact that the UK has one of the strongest financial markets in the world in addition to the fact that the European region is one of the most significant economic regions in the world today.

However, since these currencies are both from the same region, the EUR/GBP is an interesting pair for traders. Its value represents just how many GBPs you can get for a single Euro. Ultimately, this value comes down to how the economy of the European region is changing in relation to that of the UK and vice versa.

Things to Look out for as you Trade the EUR/GBP

EUR/GBP value is mostly affected by announcements from the Bank of England (BOE) and the ECB (European Central Bank). The latter releases news regularly; a lot more often than the BOE.

In general, these bodies release information regarding presiding interest rates, and other information generally used by investors to decide whether holding a certain currency is more or less desirable.

Politics are also quite important in the price movements experienced by this pair. For instance, the deliberation by the UK to leave the EU region and be on its own during the Brexit period had quite an effect on this currency pair’s value.

Things like the economic crisis in Greek, and the subsequent reactions by the EU also caused a notable effect in the value of this currency pair.

The news reports to look out for in this case include GDP (Gross Domestic Product), CPI (Consumer Price Index), and things like interest rate changes and inflation levels.

Something You Should know about the EUR/GBP Pair

The EUR/GBP is generally known for its relative stability. Consequently, it is not very volatile. This makes it more appropriate for binary options traders for whom cautious trading is a priority.

For this same reason, this currency pair is also more appropriate for traders who prefer long-term trading as opposed to short-term trading.

The Best Time to Trade EUR/GBP

On the whole, the best time to trade the EUR/GBP pair is a product of the trading method you favor above all others. If you like to trade over the shorter time-frames such as over 5 or 10 minutes, then trading when the European session is in full gear is the way to go.

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For geographical reasons, there is no clear difference between the UK session and the European session. There is just an hour separating the UK and Frankfurt, ECB’s headquarters. During these hours, you can find plenty of trading opportunities and make yourself some money.

However, if you have no problem leaving your binary options trade to sit for a day or so, it does not make much difference what time of the day it is. You can open trades when the markets are quiet because you understand that the expiry time of the contract will extend far beyond the current daily trading conditions.

In general, you should know that the EUR/GBP pair is a very liquid currency. In fact, it is one of the top ten most traded currency pairs. Therefore, it is very active throughout the trading day, and not just during the UK/European session.

What Options Work Best with EUR/GBP?

Not all options can exploit the prevailing market conditions. With the High/Low options, you have to predict the direction of the currency pair’s value. Then we have the One Touch and the No Touch options, where price direction is less relevant.

During periods of significant news releases, you can expect quite a bit of volatility in the EUR/GBP pair, and it is not always in a direction you can predict.

In such a scenario, you can use the Touch options because it will not matter what direction the currency moves as long as it deviates far enough from the current price point to surpass the set limits.

However, once all the major news have been established and the currency pair starts to follow an established direction, you can change the strategy and use a different type of option.

In particular, you can use the High/Low options because you are now in a position to tell with a better level of certainty that the currency will keep going up or down.

Finally, when the session is no longer active and the currency pair is just ranging quietly, you can try the No Touch options because you can fairly expect that the price will not encounter any interesting movements over the given period.

But again, the thing to remember is that the length of the contract you are using will dictate which strategy will work out best for you. While the EUR/GBP pair may not be the most volatile currency pair, you cannot discount the possibility of future news releases substantially influencing its trend in ways you might not predict.

One More Thing

That said, there are other things you will need to have in place as you trade the EUR/GBP. The above information is just a general guideline on what you can focus on as you devise a strategy to trade this currency pair.

At the end of the day, you will have to put some time into knowing what price prediction parameters will give you the best signals, and what options are best suited to your personality. Since the EUR/GBP is typically not too volatile, a trend indicator could help you predict this currency’s future behavior.

But at no time can you ignore the influence of various major economic events in the UK and the EU region. Even the technical price indicators for this currency will change based on the fundamentals that come with the reports released by BOE and ECB.

The use of other trading tools should only serve as a way to confirm what the fundamental factors imply about future price movements. At the very least, they should help you determine at what points to open your binary options trades and for how long they should remain open.

7 Binary Options

One of the most important things to keep in mind while trading the EURGBP in binary options is that it is a cross. Its movements are determined by the economy of the Uk and that of the Eurozone. Therefore, traders should carefully watch what happens in this two areas economically.

Trading A Currency Pair – EURGBP

By the fact that the fact that EURGBP is affected by the European and England’s economies, it means that there is a very important role played by the Central Banks of these two places; the ECB, which is the European Central Bank, and the BOE, which is the Bank of England. Traders should, therefore, be aware of the main events concerning monetary policies both in England and Eurozone.

The ECB for instance, holds meetings every month, on the first Thursday of every month except January due to holidays. Each of these meetings is followed by a press conference 45 minutes later, where the president of the ECB reads the statement of the Governing Council and also takes several questions from the representatives of the press.

The Euro Pound drastically moves as a result of the press conference than due to the actual interest rate decision of the ECB.

Then, on the same day that ECB is releasing its interest rate decision, BOE is setting the monetary policy 45 minutes prior to the ECB’s interest rate decision release. The BOE has no press conference after the release of the decision; not unless the interest rate has been changed.

Important Economic Releases To Watch In Europe

Economic news from Europe greatly affects the movement of the EURBGP currency pair. Traders should keep a keen eye on these news releases especially those which have a larger impact like the CPI, Consumer Price Index.

European CPI represents the inflation in the Eurozone and the European Central Bank depends on this inflation when setting the monetary policy.

The other important European news releases are the PMI, Purchasing Manager Index. The PMI indicates whether a sector is expanding or contracting. This, in turn, gives a clue as to whether the CBE will interpret the information as bullish or bearish.

The other news releases that traders should look at is the GDP, Gross Domestic Product, and the unemployment rate.

Unlike the effects of most Central Banks on currency pairs with a currency associated with the specific bank, the EURGBP doesn’t experience much movement when the ECB is having its monthly meetings. This is mainly due to the fact that the ECB meetings are followed by press conferences during which the market prices of the EURGBP, fluctuate drastically. Sometimes it is even impossible to trade during this time since the market becomes too volatile and the liquidity at times gets too low.

In the long run, the economic releases during the month help traders in making a wise guess as to what the ECB will do when they meet. For example, if the inflation drops below what the ECB had targeted during their last meeting, then it is only obvious for traders to expect interest rates to be cut, which will affect the Euro and the EURGBP currency pair as a whole.

Important Economic Releases To Watch In UK

The UK economy is one of the most important ones in the world of financial markets. United Kingdom’s currency, the Great Britain Pound, commonly referred to as the GBP is usually affected by some economic news releases in the UK.

The UK does not use the Euro Pound as its domestic currency. It uses the GBP which is controlled by the Bank of England, which is the Central Bank of the UK. The BOE (Bank of England) mainly has one mandate of keeping the inflation level at about 2%. To address this matter, the BOE has a Monetary Policy Committee (MPC) which holds a meeting once in every month in order to assess the country’s economy.

Contrary to the ECB meetings, the MPC meetings are never followed by any press conferences, not unless the interest rates are being changed.

Among the economic news releases which greatly affect the GBP and as a result the EURGBP, is the Gross Domestic Product (GDP). And when it comes to this, traders should be keen in noting the preliminary release since it rarely contradicts the final release.

In addition to the GDP, there are other economic releases such as the Retail Sales and the Purchasing Manager Index (PMI), which indicates the level of inflation. In actual sense, the Bank of England (BOE) is mostly concerned with the inflation. That is why the financial markets move very aggressively during the release of the Inflation Letter.

The PMI is usually split into two: the construction sector and the manufacturing sector.

What To Expect From Economic Releases

During the economic releases, one should expect very sharp movements of the EURGBP as well as to all other Euro currency pairs. Especially when using larger timeframes, one can easily notice the correlation between EURGBP and EURUSD. In most cases, these two currency pairs move together.

This shows that if a trader looks at the EURUSD and notices a rise in the market prices, then there is a similar rise in the EURGBP currency pair. The same is the case if there is a fall of the market prices of the EURUSD.

How to Trade USD/GBP in Binary Options

Updated on: 6 January 2020

The USD/GBP currency pair, also called the “Cable”, represents some of the most important economies in the world.

Generally speaking, this currency pair is a little volatile, and people who love large price variations often prefer to trade the USD/GBP over several other currency options. It should therefore come as no surprise that this currency pair is also one of the most traded financial assets in the world.

In this guide I will be teaching you how to trade USD/GBP in binary options.

Factors Affecting the Movement of the USD/GBP

Obviously, what is happening in the UK and the US will affect the behavior of this currency pair the most. In the US, the announcements made by the Fed (Federal Reserve) will often have the greatest impact on the dollar.

In the case of the UK, the BOE (Bank of England) usually has the greatest influence on how the pound changes its value over time. Consequently, as you trade the USD/GBP in the binary options market, it is important to have your finger on the pulses of these economies by following important news releases closely and in a timely manner.

The best approach is to have some knowledge of each country’s economic calender so that you know when to expect significant news items. There are usually time lines indicating when the next significant news reports will be released.

And experts will usually have approximate figures and opinions on what these reports will be like. All this information will be important as you trade this currency pair because at the end of the day, expectations are what determine what direction a currency’s value will go.

These financial bodies will release information detailing how the economies are doing with regard to employment, various market indices, GDP, inflation rates and the like. The decisions they make regarding the economy, for instance with respect to the monetary policy or interest rates will also cause notable movements in the value of each country’s currency.

It should also be pretty obvious by now that this currency will be most active during the European and the US sessions. News releases such as the NFP (Non-Farm Payrolls) data from the US and job growth data from the UK cause the most significant short term movements in the price of this currency pair during these trading sessions.

The Euro also Matters

Another thing to watch out for is the behavior of the euro. Although the UK has always opted to avoid using the euro; and has recently decided to separate itself from the region economically, it is still strongly linked to the economic happenings of the region.

Consequently, you can expect that certain economic changes in the Eurozone will spill over to the UK and have some noticeable effects on the pound. The UK is a major EU trading partner, and that means that the two economic powerhouses are somewhat linked.

So, it might not hurt to follow the euro in order to have a better insight into the way the pound will behave. Major economic issues in the EU tend to affect the UK; and this is reflected in form of inflation rate changes, and changes in the labor market or the manufacturing industry among other key economic markers.

The Impact of UK and Tokyo Sessions

The UK session and the Tokyo session also tend to overlap for an hour (between 0300 and 0400 EDT). And while USD/GBP currency pair has no direct link to the economics of the Japanese yen, the trading activity that typifies the period between 0200 and 0500 EDT can bring with it some interesting price movements in the USD/GBP; and by extension, unique trading opportunities.

The reason for this is simple – nearly half of all forex transactions are processed by the Tokyo and the London trading centers. This frenzy usually results in the USD/GBP pair assuming a definite downward or upward trend. The good thing is that when this trend starts to form, it is usually quite apparent, which means you can use the High/Low binary options to make yourself some money.

If there is one thing the USD/GBP is known for, it is its large aggressive movements; particularly after important news releases. These movements take place over a short period of time, say within an hour or so after the news is released.

Consequently, Range options can work really well in such cases. And if you are more confident about the direction of the price movement based on the nature of the release, you can always use the Up/Down options.

What Works Better for the USD/GBP, Fundamental Or Technical Analysis?

Fundamental analysis is obviously quite important to understanding how this currency pair will behave in the market. Major economic news releases will obviously have an impact on how the price of USD/GBP will change either over the short term or the long term.

Therefore, these news releases can be a good way to find large price movements that can help you make money from Range options. However, in some cases, you might know that a large move is in the offing, but find yourself lacking adequate information to understand whether it will be in an upward or downward direction.

This can happen when the market is experiencing large trading volumes and the bears and the bulls are fighting it out to see who wins. That is where technical indicators can kick in because they can tell you who is more likely to win; giving you an opportunity to take a favorable position in the market using an appropriate binary options contract.

So, even though your trading decisions may exclusively rely on fundamentals like economic data, having a few indicators in your arsenal of trading tools can help you get more out of this currency as a binary options trader.

A momentum indicator, for instance, can help you know whether the market is being bearish or bullish, and this can help you make better trades or even avoid potentially unsuccessful trades.

Find Your Own Style

Of course, when it’s all said and done, you have to try various trading styles and establish with certainty what works for you and what doesn’t. As with any other trading situation, success with the USD/GBP pair will only come after you have found a strategy that works for you; and that comes down to having a strategy that you can faithfully follow until you can achieve the monetary rewards it has in store for you.

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