GBP/EUR

When talking to one another, forex traders often use jargon to request pricing or discuss ideas about the market rapidly. One such example is GBP/EUR which is generally spoken “Sterling Euro” among forex traders using English. This shorthand notation employs the ISO 4217 standard codes to denote the forex rate of the United Kingdom’s Pound Sterling against that of the European Union’s Euro.

The GBP/EUR Currency Pair

With respect to the currency pair denoted by GBP/EUR, the United Kingdom’s Pound Sterling or GBP is the base currency and so appears first, while the European Union’s Euro or EUR is the counter-currency and is written in second place after the slash symbol. Among forex traders, this common market shorthand generally refers to how many Euros are equivalent to one Pound Sterling.

In terms of pip values, this standard forex market notation implies that pips in GBP/EUR are expressed in European Union’s Euro terms. Hence, if the GBP/EUR rate is currently trading at a rate of 1.1000, then each pip is worth 0.0001 Euros per Pound Sterling. On a 1 million Pound Sterling transaction, this single pip value would amount to 100 Euros or 90.91 Pounds Sterling at an exchange rate of 1.1000.

Market spreads in the GBP/EUR currency pair can depend on transaction volume and dealing status, but spreads of anywhere from 5 to 7 pips are fairly common in practice. Although the market in GBP/EUR is quite liquid, spreads can widen considerably during major news events and important economic data releases.

GBP/EUR is one of the more highly-traded currency pairs in the forex market, ranking second among the so-called “major crosses” and accounting for a significant percentage of forex trading volume worldwide. The primary interbank electronic trading venue for the GBP/EUR currency pair is Reuters Dealing 3000 Spot Matching that is also known as D2 or D3.

Great Britain’s Pound Sterling

The Pound Sterling has the code GBP and the symbol “£”. It is the official currency of the United Kingdom of Great Britain and has been used as legal tender throughout the British Isles since England and Scotland merged in 1707.

The Pound was decimalized in 1971and now consists of 100 new pence instead of the previous 240 pennies. In addition to bank notes, coins in denominations of 1, 2, 10, 20, and 50 new pence are commonly available in circulation, as well as one and two-pound coins.

The Pound Sterling currently ranks as the world’s third most popular reserve currency after the U.S. Dollar and the E.U.’s Euro. Furthermore, despite the United Kingdom joining the European Union, the Pound has not yet been replaced by the Euro and the prospect of doing so remains controversial within Britain.

The European Union’s Euro

The Euro has the code EUR and the symbol “€” and is the European Union’s official currency that was officially adopted in December of 1995, although trading did not commence until the beginning of 1999 when it replaced the ECU at parity. Euro currency did not come into circulation until the beginning of 2002, and it now ranks as the world’s second most popular reserve currency after the U.S. Dollar.

Furthermore, the Euro is used in five more European countries. Also, some countries on other continents, especially in Africa, peg their currencies to the Euro. Overall, this has resulted in about half a billion people either using the Euro or using currencies with exchange rates pegged to it.