GBP

The British pound sterling, abbreviated as GBP and denoted with the symbol (£), is the official currency of the United Kingdom, the South Sandwich Island, the British Antarctic Territory, the British Overseas Territories of South Georgia, the Isle of Man, the Channel Islands, and Zimbabwe. 

The GBP is the fourth most traded currency in the world behind, in succession, the U.S. dollar, euro, and Japanese yen. 

GBP
The British pound sterling is the fourth most traded currency in the world. – Image Courtesy of www.express.co.uk.

The British pound sterling is nicknamed the quid and is oftentimes referred to as sterling. The GBP comprises nearly 13% of the trading volume in the foreign exchange markets and is known as cable by forex traders. 

The GBP/USD and EUR/GBP are two of the most frequently traded currency pairs in the foreign exchange market while stock exchanges generally use GBX or GBp to signify a difference between pound sterling and pence, the latter of which is equivalent to 1/100 of a pound. Additionally, British pound sterling may be referred to as STG or sterling. 

Inflation, monetary policy, market sentiment, GBP, and balance of payments (BoP) play a considerable factor in influencing the value of the British pound sterling. 

Forex traders generally follow the Consumer Price Index (CPI) as a way to measure the amount of inflation in the United Kingdom. Likewise, an eye is kept on monetary policy instituted by the Bank of England (BOE) where the primary objective is to stabilize the British pound sterling through monetary policies like interest rate changes, which traders oftentimes try to leverage to their advantage. 

Furthermore, forex traders extract market sentiment from the Nationwide Consumer Confidence (NCCI) and Gfk Consumer Confidence reports to gauge market sentiment and levy trades accordingly. In regards to GBP, traders should familiarize themselves with Preliminary, Revised, and Final GDP as they provide traders with insight regarding the U.K.’s economic health.

Lastly, the current BoP of the U.K. is analyzed by traders who are interested in seeing whether a surplus or deficit in the capital is flowing into the British pound sterling. Retail sales also play a considerable role in influencing the GBP, as consumers are a considerable driving force of economic activity.