HOW TO TRADE FOREX: BRITISH POUND/JAPANESE YEN (GBPJPY)
The GBP/JPY pair, also known as "Geppy" among traders, is one of the most volatile and exciting currency pairs to trade. It represents the relationship between the British pound sterling and the Japanese yen, blending the inherent volatility of the pound with the relative stability of the yen as a safe-haven currency. Trading GBP/JPY effectively requires a strong grasp of technical analysis due to its volatility and constant monitoring of economic and political events in the UK and Japan that can dramatically influence its direction.
This pair is particularly sensitive to shifts in market sentiment, which can lead to rapid and wide fluctuations in its value. Traders must be prepared for sudden changes due to economic announcements, monetary policy decisions, or even shifts in global geopolitics. Trading GBP/JPY offers a unique opportunity for those looking to challenge their quickness and skill in a dynamic and often unpredictable trading environment.
Top 10 Factors Affecting the British Pound - Japanese Yen Pair
Monetary Policy of the Bank of England (BoE) and the Bank of Japan (BoJ): The interest rate decisions and other monetary policies made by the BoE and the BoJ have a significant impact on the GBP/JPY pair. Divergences in policy direction can influence investment flows between the two currencies.
Interest Rate Differentials: The differences in interest rates between the UK and Japan affect capital flow. Higher rates in the UK can attract investments to the pound sterling, strengthening it against the Japanese yen.
Economic Performance and Growth: Key economic indicators, such as GDP, inflation, and unemployment in the UK and Japan, affect the perception of relative economic strength and can influence the value of GBP/JPY.
Global Risk Aversion: The Japanese yen is considered a safe-haven currency in times of economic or political global uncertainty. During such periods, investors may move their capital to the yen, affecting GBP/JPY.
Capital and Investment Flows: Investment movements, both direct and portfolio, between the UK and Japan can affect the demand for GBP and JPY.
Fiscal Policies and Government Decisions: Significant changes in fiscal policy and government decisions in the UK and Japan can impact investor confidence and the strength of the currencies.
Political Stability: Political uncertainty, including Brexit and its consequences for the UK, and elections or political changes in Japan, can influence investor confidence and affect GBP/JPY.
Global Geopolitical and Economic Events: Economic crises, geopolitical tensions, and global developments can alter risk appetite and move GBP/JPY as investors seek safety or yield.
Trade Balance and Capital Flows: Data on trade balance and investment flows between the UK and Japan can influence the demand for both currencies.
Inflation Expectations: Future inflation expectations in the UK and Japan, and how the respective central banks respond to these expectations, can affect monetary policy outlooks and, thereby, the value of the currencies.
Related Assets Influencing the Dynamics of the GBP/JPY Pair
FTSE 100 Index: A rising FTSE 100 signals economic strength in the UK, which could strengthen GBP against JPY.
Nikkei 225 Index: Reflects the economic health of Japan. An increase in the Nikkei suggests economic optimism in Japan, potentially strengthening JPY against GBP.
Government Bonds: Yield differences between UK gilts and Japanese government bonds can influence GBP/JPY as investors seek higher returns.
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.
