Forex trading refers to the buying and selling of currencies from different countries. Each currency is identified by a unique three-letter code, known as a currency code, which is used to represent it in the forex market. These codes are based on the international standard ISO 4217, which assigns a unique code to each currency.
However, in some cases, a forex pair may have a ‘b’ at the end of the name, such as EUR/USD b or GBP/USD b. This ‘b’ represents a special type of forex pair, known as a currency pair with a base currency that is quoted in British pounds (GBP).
Currency pairs are typically written with the base currency followed by the quote currency, such as EUR/USD or GBP/USD. The base currency is the currency that is being bought or sold, while the quote currency is the currency used to purchase the base currency.
In a currency pair with a ‘b’ at the end, the base currency is still the currency being bought or sold, but it is being quoted in British pounds instead of the usual quote currency. This is because the forex market is predominantly denominated in US dollars, so the quote currency for most currency pairs is USD.
For example, in a regular EUR/USD currency pair, the base currency is the euro, and the quote currency is the US dollar. If the exchange rate for this pair is 1.20, it means that one euro can be exchanged for 1.20 US dollars.
In contrast, in an EUR/USD b pair, the base currency is still the euro, but it is being quoted in British pounds. This means that the exchange rate for this pair will be different from the regular EUR/USD pair, because the quote currency is different.
Why are currency pairs with a ‘b’ at the end used?
Currency pairs with a ‘b’ at the end are typically used in situations where the trader wants to hedge against currency risk. This means that they want to protect themselves against potential losses that could result from fluctuations in the exchange rate between the base currency and the quote currency.
For example, if a trader expects the euro to weaken against the US dollar, they may choose to buy an EUR/USD b pair instead of a regular EUR/USD pair. This is because the EUR/USD b pair will provide some protection against losses resulting from a weaker euro, since the exchange rate is quoted in British pounds instead of US dollars.
In addition, currency pairs with a ‘b’ at the end may be used by traders who have a preference for trading in British pounds. This may be the case for traders who are based in the UK, or who have a significant amount of British pound-denominated assets.
What are some common currency pairs with a ‘b’ at the end?
Some of the most common currency pairs with a ‘b’ at the end include:
– EUR/USD b (Euro quoted in British pounds)
– GBP/USD b (British pound quoted in British pounds)
– AUD/USD b (Australian dollar quoted in British pounds)
– CAD/USD b (Canadian dollar quoted in British pounds)
Conclusion
In conclusion, currency pairs with a ‘b’ at the end represent a special type of forex pair where the base currency is quoted in British pounds. These pairs are typically used by traders who want to hedge against currency risk or who have a preference for trading in British pounds. Some of the most common currency pairs with a ‘b’ at the end include EUR/USD b, GBP/USD b, AUD/USD b, and CAD/USD b.
