Personality Characteristics of the GBP/USD

The “Sterling” or “Cable” is probably the most schizophrenic of the currency pairs as it is much more volatile and erratic.

Why is the GBP/USD so erratic?

£ This is due to the lower liquidity available and the larger
point value and because of the low liquidity, the pound tends to act as
a leader in major U.S. dollar moves

Additional Characteristics

£ Frequently watched by EUR/USD traders for clues on direction
e.g. If the pound breaches a recent high and follow through, it is a strong signal that the Euro will do the same

£
In a highly directional market, the pound will tend to display extreme
one-way behavior rarely pulling back more than a few pipes.  This
suggests that traders should not hold out hope for a pullback

£ The pound frequently exhibits false breaks when it comes to technical levels in a calm market.

£
It is uncommon for the pound to trade 15 to 20 points through a
technical level and then reverse suggesting that traders need to
anticipate potential false breaks

£ Liquidity greatly reduced after London close.  This may cause highly erratic movement.

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