Forex pairs in London refer to the currency pairs that are commonly traded on the foreign exchange market in London, the largest currency trading center in the world. London is known as the global hub of forex trading, with a daily trading volume of over $2.4 trillion. In this article, we will explain what forex pairs are, how they are traded in London, and the most popular forex pairs in London.
What are Forex Pairs?
Forex pairs refer to the two currencies that are being traded against each other in the foreign exchange market. In forex trading, you are always buying one currency and selling another currency simultaneously. The value of a currency is determined by its exchange rate with another currency. For example, if the exchange rate of GBP/USD is 1.30, it means that one British pound is equivalent to 1.30 US dollars.
Forex pairs are always quoted in pairs, with the base currency being the first currency in the pair, and the quote currency being the second currency in the pair. For example, in the GBP/USD pair, the base currency is British pounds, and the quote currency is US dollars. The base currency is always the currency that you are buying or selling, while the quote currency represents the currency that you are using to make the transaction.
How are Forex Pairs Traded in London?
Forex trading in London is conducted through electronic trading platforms and over-the-counter (OTC) transactions. The forex market in London operates 24 hours a day, five days a week, with trading beginning on Sunday evening and ending on Friday evening. The most active trading hours in London are during the overlap of the European and US trading sessions.
Forex traders in London can trade forex pairs through a variety of trading instruments, including spot forex, forex futures, forex options, and forex contracts for difference (CFDs). Spot forex is the most common trading instrument, where traders buy or sell forex pairs at the current market price. Forex futures and options are traded on exchanges, while forex CFDs are traded through online brokers.
Popular Forex Pairs in London
The most popular forex pairs in London are known as the major currency pairs. These pairs include the US dollar (USD) and the currencies of the world’s largest economies, such as the Euro (EUR), the Japanese yen (JPY), the British pound (GBP), the Swiss franc (CHF), the Canadian dollar (CAD), and the Australian dollar (AUD). The major currency pairs account for over 85% of the forex market’s trading volume.
The most popular forex pair in London is the EUR/USD pair, which accounts for over 30% of the forex market’s trading volume. The EUR/USD pair is closely followed by the GBP/USD pair and the USD/JPY pair. Other popular forex pairs include the EUR/JPY, AUD/USD, USD/CAD, and USD/CHF pairs.
Conclusion
Forex pairs are the currencies that are traded against each other in the foreign exchange market. In London, the largest forex trading center in the world, forex pairs are traded through electronic trading platforms and over-the-counter transactions. The most popular forex pairs in London are the major currency pairs, which include the currencies of the world’s largest economies. Understanding forex pairs is essential for forex traders who want to trade in London’s dynamic forex market.
