Volatility between the British pound and the US dollar may be rare, but today there has been a distinct movement this morning which represents as much of a volatile movement as can be expected from two of the most established major currencies.
At market open in London on April 6, the GBPUSD pair was down to 1.30, which represents its lowest point during the course of the past seven days.
This came after a sudden rise in value which resulted in a spike toward the higher 1.32 range yesterday afternoon just before the markets closed in London, which was in fact the highest point that the GBPUSD had traded at all week.
Therefore, going from the highest point in seven days to the lowest within a matter of hours can be considered to be market volatility as far as the GBPUSD currency pair is concerned.
There have been no specific factors which could have directly contributed to this sudden volatility, however with the attention of many economists focusing on what the Central Banks in both the United Kingdom and the United States may do as a reactionary measure to the spiralling inflation that is being experienced by the populations on both sides of the Atlantic, there is anticipation and varying patterns among traders.
The global currency markets have been resigned almost completely to two specific dynamics over recent years, those being that there has been very little volatility among major currencies, but substantial volatility among exotic and lesser-traded currencies issued by central banks in nations with less diversified economic bases and with less stable governance.
Often, traders within professional desks in investment banks and day traders outside the interbank dealing have stuck firmly to trading specific majors, and there are entire departments of currency traders within financial institutions that specialise in trading specific major currencies, therefore adding to the stability and institutional preference for non-volatile majors.
Things have certainly changed slightly recently, and this week’s sudden upward movement followed by a sudden downward movement for the GBPUSD is a case in point. Just two points may not sound a lot, but it is when looking at the chart performance and the otherwise millpond-like calmness of this particular currency pair.
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