How to Trade the EUR/GBP in Binary Options

Updated on: 6 January 2020

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The EUR/GBP is one of the most popular currency pairs in the world. And that is for the simple fact that the UK has one of the strongest financial markets in the world in addition to the fact that the European region is one of the most significant economic regions in the world today.

However, since these currencies are both from the same region, the EUR/GBP is an interesting pair for traders. Its value represents just how many GBPs you can get for a single Euro. Ultimately, this value comes down to how the economy of the European region is changing in relation to that of the UK and vice versa.

Things to Look out for as you Trade the EUR/GBP

EUR/GBP value is mostly affected by announcements from the Bank of England (BOE) and the ECB (European Central Bank). The latter releases news regularly; a lot more often than the BOE.

In general, these bodies release information regarding presiding interest rates, and other information generally used by investors to decide whether holding a certain currency is more or less desirable.

Politics are also quite important in the price movements experienced by this pair. For instance, the deliberation by the UK to leave the EU region and be on its own during the Brexit period had quite an effect on this currency pair’s value.

Things like the economic crisis in Greek, and the subsequent reactions by the EU also caused a notable effect in the value of this currency pair.

The news reports to look out for in this case include GDP (Gross Domestic Product), CPI (Consumer Price Index), and things like interest rate changes and inflation levels.

Something You Should know about the EUR/GBP Pair

The EUR/GBP is generally known for its relative stability. Consequently, it is not very volatile. This makes it more appropriate for binary options traders for whom cautious trading is a priority.

For this same reason, this currency pair is also more appropriate for traders who prefer long-term trading as opposed to short-term trading.

The Best Time to Trade EUR/GBP

On the whole, the best time to trade the EUR/GBP pair is a product of the trading method you favor above all others. If you like to trade over the shorter time-frames such as over 5 or 10 minutes, then trading when the European session is in full gear is the way to go.

For geographical reasons, there is no clear difference between the UK session and the European session. There is just an hour separating the UK and Frankfurt, ECB’s headquarters. During these hours, you can find plenty of trading opportunities and make yourself some money.

However, if you have no problem leaving your binary options trade to sit for a day or so, it does not make much difference what time of the day it is. You can open trades when the markets are quiet because you understand that the expiry time of the contract will extend far beyond the current daily trading conditions.

In general, you should know that the EUR/GBP pair is a very liquid currency. In fact, it is one of the top ten most traded currency pairs. Therefore, it is very active throughout the trading day, and not just during the UK/European session.

What Options Work Best with EUR/GBP?

Not all options can exploit the prevailing market conditions. With the High/Low options, you have to predict the direction of the currency pair’s value. Then we have the One Touch and the No Touch options, where price direction is less relevant.

During periods of significant news releases, you can expect quite a bit of volatility in the EUR/GBP pair, and it is not always in a direction you can predict.

In such a scenario, you can use the Touch options because it will not matter what direction the currency moves as long as it deviates far enough from the current price point to surpass the set limits.

However, once all the major news have been established and the currency pair starts to follow an established direction, you can change the strategy and use a different type of option.

In particular, you can use the High/Low options because you are now in a position to tell with a better level of certainty that the currency will keep going up or down.

Finally, when the session is no longer active and the currency pair is just ranging quietly, you can try the No Touch options because you can fairly expect that the price will not encounter any interesting movements over the given period.

But again, the thing to remember is that the length of the contract you are using will dictate which strategy will work out best for you. While the EUR/GBP pair may not be the most volatile currency pair, you cannot discount the possibility of future news releases substantially influencing its trend in ways you might not predict.

One More Thing

That said, there are other things you will need to have in place as you trade the EUR/GBP. The above information is just a general guideline on what you can focus on as you devise a strategy to trade this currency pair.

At the end of the day, you will have to put some time into knowing what price prediction parameters will give you the best signals, and what options are best suited to your personality. Since the EUR/GBP is typically not too volatile, a trend indicator could help you predict this currency’s future behavior.

But at no time can you ignore the influence of various major economic events in the UK and the EU region. Even the technical price indicators for this currency will change based on the fundamentals that come with the reports released by BOE and ECB.

The use of other trading tools should only serve as a way to confirm what the fundamental factors imply about future price movements. At the very least, they should help you determine at what points to open your binary options trades and for how long they should remain open.

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