Pound sterling / US Dollar - GBP/USD

The GPB/USD cross (Pound sterling / American Dollar) represents about 14% of the total volume of transactions done 24h/24 on Foreign Exchange Market, the Forex.

This cross, nicknamed “the “Cable” in reference to a cable under the Atlantic Ocean that was used in the past to synchronize the London and New York exchange markets, is the most volatile major currency cross traded on the Forex, and this volatility is particularly accentuated during the opening hours of the English market.

The recent history of the parity GBP/USD evolution saw a continuous apprising of the Pound Sterling from 2002 (GBP/USD = 1.3793) to the beginning of 2005 (GBP/USD = 1.9267), an adjustment took place during 2005 (GBP/USD = 1.7211 by the end of 2005).

A monetary policy based on the fight against inflation encouraged the Bank of England, in 2006 and 2007, to raise with important proportions (far more than 5%) their key interest rates (in particular the main reference rate, the “Bank Repo Rate”); and the Pound sterling apprised fast against the Dollar for two years, until the parity GBP/USD = 2.1161 reached on November,7th 2007, an historical “higher point” that had never been reached in 26 years.

During this period, even if the « carry trade » operations led to the Pound Sterling massive purchase and investment with high rates were even more important in comparison with the GBP/JPY (Pound Sterling/Japanese Yen), this phenomenon has an important role for the GBP/USD.

During the subprime crisis and the generalized financial crisis of 2008, the Pound began falling from the Fall of 2007 even faster than it had risen, and the parity GBP/USD established on January, 23rd 2009 at 1.3500, the lowest 24-years historic on the foreign exchange market. On April, 23rd 2009, the “Cable” showed a parity of GBP/USD = 1.4637.