British binary option
Economy of the the United Kingdom : facts & statistics
|Official name||the United Kingdom of Great Britain and Northern Ireland|
|Nominal GDP||$2,316,200 million (2012)|
|GDP per capita||$36,727|
|Real GDP growth rate||2.55% (2014)|
|Inflation rate||1.46% (2014)|
|Unemployment rate||2.6% (December 2014)|
Top Binary Options Brokers in the UK
Understanding the Characteristics of British Pound
The British Pound Sterling (GBP) is the official currency of the United Kingdom. Before the U.S. dollar is used as the world’s primary reserve currency, the British pound was the world reserve currency. Even though the UK is a member state of the European Union (EU), it adopts the pound sterling instead of the euro as its national currency. This is because that British people are in favor of keeping the pound sterling. The British pound sterling is the fourth most traded currency, after the U.S. dollar, the euro and the Japanese yen, and it is known for high volatility.
As opposed to the short-term binary options trading, in the long-term foreign exchange margin trading, substantial risk of loss may occur. Many novice investors thus would prefer not to invest in the British pound sterling.
As the British pound sterling is the official currency of the United Kingdom, it is thus greatly influenced by the UK economic indicators. The list of major UK economic indicators that an investor needs to focus on is the same as that of the US. It includes the unemployment rate, QIR Quarterly Inflation Report released by the Bank of England, GDP, etc. Especially, it is important to pay attention to the US employment report as it has an impact on the movements of the GBP.
Compared with other representative major currencies, such as the U.S. dollar, the euro, the Japanese yen and the Singapore dollar, the British pound sterling is characterized by short-term sharp volatility. It is thus necessary to pay attention to the large movements after the release of economic indicators.
List of Economic Indicators You Should Pay Attention To When Trading British Pound
|BOE Interest Rate||at the beginning of each month|
|BOE Inflation Report||at the beginning of February, May, August and November|
|Unemployment Rate||in the middle of each month|
|MPC Meeting Minutes||in the middle of each month|
|Industrial Production Index||the first Friday of each month|
|Retail Sales||in the middle of each month|
|Gross Domestic Product (GDP)||quarterly|
|Nationwide House Price Index||at the end of each month|
Among all the economic indicators, it is most important to pay attention to the policy interest rate and the inflation report released by the Bank of England (BOE). The BOE sets the inflation target at 1%～3%. If inflation is high, the BOE may increase interest rates. On the other hand, interest rates may be lowered if inflation is low.
Basically, investors tend to buy the British pound when interest rates are increased and sell the pound when interest rates are lowered. The release of policy interest rate is closely related to the movements of exchange rate and it attracts the attention of investors from all over the world.
In addition, over 50% of trading partners of the United Kingdom are EU countries. If a crisis or negative factors occurred in the European countries, investors tend to sell the British pound. Therefore, it is necessary to pay attention to the movements of the EU market while trading the British pound.
As it is mentioned above, so far novice traders have been concerned about the British pound in the long-term foreign exchange margin trading. In the case of short-term binary options trading, if you can seize the opportunity and make the right decision, you can make a profit by trading the British pound.
Different from other major currencies such as the US dollar, the euro and the Japanese yen, the British pound can move easily in one direction. Therefore, it is necessary to pay attention to the movements and avoid of going in opposite directions. In order to better predict the movements of the British pound, it is better to be cautious when you draw the trend line.
Binary Options in the UK
On this website, we will introduce a list of best binary options brokers for UK residents. Since the payout rates and trading details of brokers are different from one another, it is better to choose the right broker for your purpose.
Most popular brokers for British traders
*Investors can lose all their capital by trading binary options.
What You Should Pay Attention To When Trading British Pound
As the British pound is more commonly traded in domestic market than overseas, the volume of trade is small. There are investors who are in favor of high risk and high returns tend to carry out large transactions in short-term trading. Thus, large movements in the value of the British pound are likely to occur.
As the price movements are large, if you trade the British pound by only looking at short-term charts such as 1-minute chart and 5-minute chart, it is very likely to make incorrect predictions. It is thus better to make use of 1-hour or 4-hour chart to predict the direction of the market.
The regional risks may also influence the British pound. The pound used to be the world’s primary reserve currency and a lot of large global corporations, securities finance companies, banks and law firms are located in the UK. London is the world’s most important financial centre, thus the pound is a currency that can be easily targeted by terrorists.
Because the British pound is a currency with high interest rates, it is necessary to pay attention to the release of interest rate. The pound is known as a high interest rate currency as the interest rates have reached high levels in history. As a developed country, interest rates in the UK were once increased to 15% in the 1970s. Even though more than 40 years have passed, interest rates in the UK still draw attention from all over the world. It is very important to pay attention to the policy interest rate as currency fluctuations may occur in accordance with the movements of interest rates.
Lastly, it may be easily overlooked that the United Kingdom is one of world’s top 10 oil exporting countries. The North Sea oil supplies the energy needs and the crude oil price is closely related to the country’s economy. However, as there is no link between the crude oil price and the currency, there is no link between the crude oil price and the British pound.
Changes in policy interest rate of the United Kingdom