HOW TO TRADE FOREX: BRITISH POUND/CANADIAN DOLLAR (GBPCAD)
The GBP/CAD pair offers a captivating study of the interplay between the British economy, with its historical strength in financial services and recent profound political uncertainty, and the Canadian economy, rooted in the export of natural resources. Trading GBP/CAD effectively demands rigorous monitoring of political developments in the UK, including Brexit negotiations and their economic repercussions, as well as shifts in commodity prices that directly impact Canada, especially oil.
This pair is particularly sensitive to changes in monetary policy from the Bank of England and the Bank of Canada, as well as to fluctuations in global commodity markets. Traders must monitor both nations' key economic reports, such as GDP, inflation, and unemployment. A trading strategy for GBP/CAD should blend technical analysis with a deep understanding of economic and political factors to capitalize on the volatility of this pair.
Top 10 Factors Affecting the British Pound - Canadian Dollar Pair
Monetary Policy of the Bank of England (BoE) and the Bank of Canada (BoC): Differences in monetary policies and interest rate decisions by these central banks can significantly influence the GBP/CAD dynamics. Divergences in policy direction can affect investment flows between the two currencies.
Interest Rate Differentials: The spreads between interest rates in the UK and Canada can affect capital flow. A relatively higher interest rate in one of these countries could attract investors seeking better returns, strengthening its currency against the other.
Economic Performance: Key economic indicators, such as GDP, inflation, and unemployment in both countries, affect the perception of relative economic strength and can influence the GBP/CAD value.
Oil and Commodity Prices: Since Canada is a major exporter of oil and other raw materials, global prices of these commodities can significantly impact the CAD. The UK, also an oil producer but to a lesser extent, may be differently affected.
Trade Balance: The trade balance between the UK and Canada, as well as their trade balances with the rest of the world, can influence the demand for GBP and CAD. A trade surplus can strengthen the national currency.
Global Risk Aversion: Changes in global risk appetite can affect currencies of countries with smaller economies or those dependent on exports, like the CAD, compared to reserve currencies like the GBP.
Fiscal Policies and Government Spending: Fiscal policies and government spending decisions in the UK and Canada can impact investor confidence and the strength of the currencies.
Political Stability and Geopolitical Events: Political uncertainty, including Brexit and its consequences for the UK, and elections or political changes in Canada, can influence investor confidence and affect the GBP/CAD.
Inflation Expectations: Future inflation expectations and central banks' responses to these expectations can affect monetary policy outlooks and, thereby, the value of the currencies.
Global Economic Events and Crises: Financial crises and other worldwide impact events can alter risk appetite and move GBP/CAD as investors seek safety or yield.
Related Assets Influencing the GBP/CAD Pair Dynamics
Brent Oil Prices: Fundamental to the CAD due to the importance of oil in the Canadian economy. Increases in oil prices usually benefit the CAD against the GBP.
FTSE 100 Index: This index reflects the economic health of the UK. A strong performance can suggest a robust economy, potentially strengthening the GBP against the CAD.
S&P/TSX Composite Index: Represents the Canadian economy. An ascending index indicates economic strength and can favour the CAD against the GBP.
Government Bonds Yields: Government bonds from the United Kingdom (Gilts) can influence currencies' risk and return perception. Increasing Gilt yields strengthen the GBP against the Dollar.
Top FX Trading Apps
Opening a FX Trading Account
Select a Reliable Broker: Research and choose a broker that meets your expectations regarding trading tools. The security of your funds should be your priority.
Registration: Go to the broker's website and find the option to register a new account. You will need to provide basic personal information, such as name, email address, phone number, and, in some cases, an ID document to verify your identity.
Account Verification: Brokers require a verification process to comply with anti-money laundering regulations. This usually involves uploading documents such as a photo ID and proof of address.
Initial Deposit: You can make your first deposit once your account is verified. Brokers offer different payment methods, including bank transfers, credit/debit cards, electronic payment systems, and even cryptocurrencies. Returning to point 1, if you have specific needs like "I can only use brokers that accept payment method XYZ, " choose the broker that fits your needs.
Trading Platform: With your account funded, you can now access the broker's platform. If you haven't already, now is the time to familiarise yourself with the platform. Take advantage of the demo account if it's available. It allows you to practice your trading strategies, an advantage not only for beginners but also for experienced traders who are testing new strategies or simply seeing the execution and advanced features the trading app offers.
Set Up Your Trading Space: Customize the platform according to your preferences. This includes selecting the financial instruments you plan to trade, setting up charts, and implementing any technical indicators you regularly use.
Trading Strategy: If you haven't already, define your trading strategy, including risk management. Setting loss limits and profit targets can help you keep your trading disciplined and focused on your long-term goals.
First Trades: With everything in place, you can start trading.
BlackBull Markets, founded in 2014 by Michael Walker and Selwyn Loekman in Auckland, New Zealand, has emerged as a trusted and regulated ECN broker offering access to diverse tradable instruments. BlackBull Markets stands out with its three distinct types of ECN accounts, catering to traders' varying needs and preferences: Standard Account, Prime Account, and Institutional Account.
The Standard Account is an excellent choice for traders seeking a cost-effective forex experience. It offers a convenient entry point without minimum deposit requirements and commission-free trading. Traders can access all tradeable instruments and utilize user-friendly trading platforms, including PC, Mac, mobile, and Webtrader.
The Prime Account provides a competitive edge for those looking to maximize their trading potential. With spreads as low as 0.1 pips and a commission of $6 per lot for most currency pairs, traders can benefit from tighter spreads and lower costs. The Prime Account requires a minimum initial deposit of 2000 USD and offers leverage of up to 1:500, along with micro lots for precise position sizing.
BlackBull Markets also caters to larger traders with its Institutional Account, providing a truly institutional trading experience. With a minimum initial deposit of 20,000 USD, traders can access customisable commission structures, 24/7 dedicated technical support, and a customised MAM/PAMM platform. Qualifying traders can benefit from free VPS access based on trading volume.
Regulation is key to BlackBull Markets' offering, ensuring a secure and transparent trading environment. Prominent authorities regulate the broker, including the Financial Services Commission of New Zealand (FSPR).
With a commitment to exceptional financial services and a focus on client satisfaction, BlackBull Markets has garnered a strong reputation within the industry. Their comprehensive range of over 26,000 tradable instruments, competitive trading conditions, and reliable customer support positions them as a top choice for traders seeking a trusted ECN broker.
Trading foreign exchange on margin carries a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange, you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your initial investment and, therefore, you should not invest money you cannot afford to lose. You should make yourself aware of all the risks associated with foreign exchange trading and seek advice from an independent financial advisor if you have any questions or concerns as to how a loss would affect your lifestyle.
