Forex trading is all about taking advantage of the fluctuations in exchange rates between different currency pairs. One of the most popular pairs in the forex market is the EURGBP. This pair represents the exchange rate between the Euro and the British Pound. However, traders need to understand that the value of one currency is often influenced by the value of another currency. For instance, if the value of the Euro increases, the value of the British Pound may decrease, and vice versa. In this article, we will explore which forex pairs are negatively correlated with the EURGBP pair.
Before we delve into the details, it’s essential to understand what we mean by correlation in forex trading. Correlation measures the degree to which two currency pairs move in the same or opposite direction. A positive correlation indicates that two currency pairs move in the same direction, while a negative correlation indicates that they move in the opposite direction.
Now, let’s look at the forex pairs that are negatively correlated with the EURGBP.
1. USDCHF
The USDCHF pair represents the exchange rate between the US dollar and the Swiss Franc. The Swiss Franc is often considered a safe-haven currency, and it has a negative correlation with the EURGBP. This means that when the Euro strengthens, the Swiss Franc often weakens, and vice versa. Therefore, traders who are looking to trade the EURGBP may consider trading the USDCHF as a hedge.
2. USDJPY
The USDJPY pair represents the exchange rate between the US dollar and the Japanese Yen. The Japanese Yen is also considered a safe-haven currency, and it has a negative correlation with the EURGBP. This means that when the Euro strengthens, the Japanese Yen often weakens, and vice versa. Therefore, traders who are looking to trade the EURGBP may consider trading the USDJPY as a hedge.
3. AUDUSD
The AUDUSD pair represents the exchange rate between the Australian dollar and the US dollar. The Australian dollar is often considered a commodity currency, and it has a negative correlation with the EURGBP. This means that when the Euro strengthens, the Australian dollar often weakens, and vice versa. Therefore, traders who are looking to trade the EURGBP may consider trading the AUDUSD as a hedge.
4. NZDUSD
The NZDUSD pair represents the exchange rate between the New Zealand dollar and the US dollar. The New Zealand dollar is also considered a commodity currency, and it has a negative correlation with the EURGBP. This means that when the Euro strengthens, the New Zealand dollar often weakens, and vice versa. Therefore, traders who are looking to trade the EURGBP may consider trading the NZDUSD as a hedge.
5. USD CAD
The USD CAD pair represents the exchange rate between the US dollar and the Canadian dollar. The Canadian dollar is often considered a commodity currency, and it has a negative correlation with the EURGBP. This means that when the Euro strengthens, the Canadian dollar often weakens, and vice versa. Therefore, traders who are looking to trade the EURGBP may consider trading the USDCAD as a hedge.
In conclusion, the EURGBP pair is one of the most popular pairs in the forex market. However, traders need to understand that the value of one currency is often influenced by the value of another currency. Therefore, it’s essential to understand the correlation between different currency pairs. The forex pairs that are negatively correlated with the EURGBP are USDCHF, USDJPY, AUDUSD, NZDUSD, and USDCAD. Traders who are looking to trade the EURGBP may consider trading these pairs as a hedge.
