Each GBP pair lives and trades within its own separate universe yet all GBP pairs together are members of the same family. Wide range pairs GBP/NZD, GBP/AUD and GBP/CAD are counterbalanced by subordinate lower range pairs GBP/JPY, GBP/USD, GBP/CHF and GBP/EUR. The terms lower vs higher ranges for GBP pairs is a mis applied concept particularly as it relates to short term trades.
GBP and Ranges
Higher and lower ranges assumes automatically wider vs lower or bigger Vs smaller movements. For GBP, not necessarily. Exchange rate numbers disparity to wide distances between each GBP pair were applied, speculatively, on purpose to allow each GBP pair its own separate trading range within its own universe. Exchange rates for GBP means 0 point reciprocals and the straight 1.0 numbers as seen and traded on broker platforms.
GBP: Separate but Equal
All GBP pairs to apply the Plessey Vs Ferguson decision are separate but equal. Separate but equal means GBP pairs lack ability to violate each other's trading range although on rare occasions GBP/NZD and GBP/AUD may violate spaces but those are fleeting instances and never last as market traders correct for imbalances.
GBP = GBP
Understand GBP = GBP. All GBP pairs are members of the same family and not one GBP pair is contrary to the GBP universe such as EUR/GBP to EUR or AUD/NZD and sometimes AUD/CAD to AUD or CAD/CHF to USD/CAD. The anti aspect to GBP's exchange rate line up allows GBP a free wheeling, high flying currency. It doesn't often trade to its full potential but on paper, GBP encompasses the abilities.
GBP is arranged as GBP/NZD at the top vs GBP/CHF at the bottom anchor or a 6900 pip disparity. Remainder GBP pairs are located between GBP/NZD and GBP/CHF. Why GBP/CHF serves as the true anchor currency pair is because GBP/EUR is just an average currency pair in the GBP universe and lacks importance to the overall GBP whole. GBP/CHF serves the anchor function because at current 1.2600's vs GBP/EUR at 1.1750's, GBP/CHF exchange rate numbers are more closely aligned to the GBP aggregate.
GBP Price Drivers
The answer to GBP price drivers is it depends. Each GBP pair contains an equal chance to activate the GBP complex. Yet each GBP pair contains the same ability to render all GBP as neutrality. GBP/NZD, GBP/AUD and GBP/CAD serves an equal function to drive remainder GBP pairs as much as GBP/USD, GBP/JPY and GBP/CHF to GBP/NZD, GBP/AUD and GBP/CAD. Overbought or oversold may apply to one or more GBP pairs. Possibly one or two GBP pairs drives the total. Why?.
GBP and GBP Pair Trading
GBP/NZD, GBP/AUD and GBP/CAD trade within 1500 and even 2000 pip ranges. Those ranges rarely break. AS GBP/NZD, GBP/AUD and GBP/CAD trade and move, ranges usually adjust rather than break. It takes an extraordinary move to break ranges such as a Brexit, 2009 EUR/CHF or 2008 crash scenario. Trading and movement in the big 3 is best described as wandering aimlessly subject to the impulses to other GBP pairs, oversold or overbought by themselves.
Before GBP/USD, GBP/CHF and GBP/JPY achieved long term targets, all were price drivers to the total. The lower 3 now trade approximately within the context to their ranges. Until a deviation in GBP prices materialize, GBP lacks an overall directional trade strategy. However, all GBP pairs trade at the bottoms of a 20 year range.
GBP Pair Relationships
GBP/NZD and GBP/AUD share a close relationship as the top 2 currencies while GBP/USD and GBP/CHF are deeply aligned. GBP/CAD and GBP/JPY at the center serves as neutral currencies although GBP/JPY chooses for the most part to align to GBP/USD. Why align to GBP/USD is explained by GBP/JPY's hiighly special ability as a key forecast currency to JPY cross pairs. And because its traditional for JPY cross pairs to align to main USD V Non USD pairs. Then comes the inability for 1.41 GBP/JPY to never trade above GBP/CAD at 1.70's or lower than GBP/USD at 1.3000's. GBP exchange rate alignments are permanent features and never to change.
GBP/JPY V GBP/CAD Neutrality
GBP/JPY and GBP/CAD represent not only the demarcation line between the GBP bottom and top but as neutral currencies, GBP/CAD and GBP/JPY provides abilities for the triangulation trade to emerge. As exchange rate forecast exchange rate predictions were tested, GBP/CAD and GBP/JPY appeared in the neutral position more often than any GBP pair. A triangulation fairly defined is a neutral currency Vs 2 currencies allowed movements.
GBP/EUR as least important currency pair means it also severely lacks forecast abilities to other GBP pairs. However, EUR/GBP as another highly special currency not only serves a vital function to forecast EUR pairs but EUR/GBP and GBP together predicts perfectly tops, bottoms, entries and targets for EUR/USD, EUR/GBP, EUR/CHF and EUR/CAD. EUR pairs then forecasts from EUR and from GBP.
GBP Predicts GBP
To forecast EUR pairs from EUR requires nuances and changes to reciprocals and straight 1.0 exchange rates. GBP lacks the EUR complications to forecast exchange rates predict exchange rates. But minor steps are involved and those revelations won't publish here.
Exchange Rates Predict Exchange Rates
The concept exchange rates predict exchange rates is a self fullfilling method as present currency pairs, speculatively, are chosen for a reason. Possibly to measure and contain exchange rate numbers within a special distance and to force constraints to currency prices by limit to wide price trading. Not one currency price will fall outside the current alignment because all currency prices align to each other in an interlocking, highly self contained market. Explains why exchange rates predict exchange rates is valid until the end of time.
Only special Statistics forecast perfectly exchange rates predict exchange rates. Not sure how or why a trading system is necessary as a pen, paper and calculator are only requirements to either work Statistics or to use exchange rates predict exchange rates.
While focus in this set of articles addresses each individual set of exchange rates, many, many ways exists to perfectly forecast currency prices by using other currency pairs outside of the sets. GBP/USD and USD/CAD is just one such example.
GBP predicts GBP/AUD is most popular among the GBP line up while GBP fails to forecast GBP/JPY yet GBP/JPY forecasts GBP pairs.
All exchange rates
= GBP/CAD and GBP/JPY, GBP/AUD bottom, GBP/CHF target and reverse
Minus GBP/JPY = GBP/AUD, GBP/USD and GBP/NZD
Minus GBP/NZD = GBP/CHF
Minus GBP/AUD = GBP/CHF
Minus GBP/CAD = GBP/AUD, GBP/CAD and EUR/USD
Minus GBP/USD = GBP/AUD and GBP/NZD
Minus GBP/CHF = GBP/AUD
Reciprocals, add EUR/GBP
Minus GBP/JPY = GBP/CHF, EUR/CAD
Minus GBP/NZD = GBP/CHF, GBP/AUD and EUR/USD
Minus GBP/AUD = GBP/NZD and EUR/USD
Minus GBP/USD = GBP/CHF, EUR/CAD and EUR/CHF
Minus GBP/CHF = GBP/CHF and EUR/CAD
Minus GBP/AUD = GBP/NZD and EUR/USD
Minus GBP/CAD = ?
Reciprocals, add GBP/EUR
= EUR/GBP and GBP/USD
Minus GBP/JPY = 0
Minus GBP/USD = EUR/GBP and GBP/CHF
Minus GBP/CHF = EUR/GBP, GBP/AUD, GBP/CHF
GBP/EUR is a failure
All Exchange Rates, add GBP/EUR
Total = GBP/EUR failure
Minus GBP/NZD = GBP/CAD and EUR/GBP
Minus GBP/AUD = EUR/GBP
Minus GBP/CAD = EUR/GBP
Minus GBP/JPY = Nothing
Minus GBP/USD = GBP/CHF
Minus GBP/CHF = GBP/AUD and GBP/CHF
Reciprocals, Eliminate EUR/GBP and GBP/EUR
Minus GBP/JPY = GBP/CAD, GBP/USD and GBP/AUD
Minus GBP/USD = GBP/USD, GBP/CAD and EUR/USD
Minus GBP/CHF = GBP/USD, GBP/CAD and EUR/CHF
Minus GBP/NZD = GBP/AUD, GBP/NZD and EUR/USD
Minus GBP/AUD = GBP/CHF and EUR/USD
Minus GBP/CAD = GBP/CHF and EUR/USD
Trading currencies and other financial instruments carries a degree of loss and possible loss of entire investments. Please managed your own risks, stop loss, and margins requirements.