Understanding what the forex cable is

April 22, 2012 by Adam Woods  
Filed under Investment

Whole FX market revolves around one thing which is exchange price through which two different currencies are linked together. A new comer in FX market may come across a question like what is forex cable. For understanding the answer he may know the history of foreign exchange which says that the GBP/USD exchange rate is FX cable because in 1858 the main foreign exchanges of America and Britain which were New York and London were interconnected by mean of a cable which used to pass through the Atlantic Ocean. It was used for transmission of then exchange prices.

Telegraphic transmission was the medium used at that time for transferring the information between two places and so was the case in FX market. The two currencies in GBP/USD belong to the two supreme FX markets of the world. GBP/USD refers to the exchange ratio of British pound that is sterling and US dollars and it outlines the unit of British pound which can be purchased from one US dollar.

In early times when science was not developed, wires were used as medium of transmission instead of satellite communication and fibre optic which are used these days. A large share of total currency pairs involves US dollars because it holds major share in financial market. The other currency pairs are cross currency pairs which do not consists of US dollars.

The financial condition is FX market can be directly judged by judging the condition of some of the supreme currencies in the world. Britain pound and US dollar are two of them which forms the cable thus unremittingly checking it situation in market can give an idea about the future which will be undergone by other currencies in future. The GBPUSD exchanges rate freshly witnesses some downward trend due to which all other currencies encountered a decreased value. While on the other hand when the rates move up, other currencies are affected in the similar manner.

Everyday market witnesses ups and downs in exchange rate of two of the world’s strongest currencies. Recently GBPUSD dropped which indicates that more units of British pounds could be purchased from same units of US dollars. Basically, GBPUSD serves as the standard for analysis future situation.

The FX market can become stagnant at one time and can show fluctuation at some other time. All the successful traders understand what the forex cable is and how they can use it to forecast the movement of biggest financial market.

Adam has been trading forexfor Many years and until recently with Not Much success. Adam recently joined The World Forex Club where he has gained the Forex Education that he needed to sky rocket his earnings in the forex market.


Speak Your Mind

Tell us what you're thinking...
and oh, if you want a pic to show with your comment, go get a gravatar!