02 Jan TRADING EDUCATION: GBP AUD
The GBP AUD currency pair is often called “Pound-Aussie”.
The Australian Dollar is considered to be a risk currency, this is due to its relatively higher interest rates and its unusual correlation to global equity markets centring around the AUD’s relationship with Chinese economic growth and demand for industrial metals such as Iron Ore.
Broker spreads on the GBP/AUD are typically large comparative to the major currency pairs and market movements can be volatile. Although these factors increase the risks associated with the GBP AUD, they also offer substantial rewards in terms of the size and length of directional moves within price.
Experienced traders have found the GBP AUD an ideal move away from the four majors. Its seen to be a fantastic tool for diversification, although a less preferable currency pair for new traders as they learn to trade.
In terms of currency risk profiles, the Pound Sterling (GBP) is seen as a barometer of world growth however, it is also – more importantly – a safe haven currency due to the long term stability of the GBP. The Australian Dollar (AUD) is currently seen as a barometer for global growth as China is Australia’s major export market.