British Pound (GBP)
Central Bank: Bank of England (BoE)
Current Interest Rate: http://www.bankofengland.co.uk/

Her Majesty's Currency
As the primary governing body in the United Kingdom, the Bank of England serves as the British equivalent to the Federal Reserve System. Like the Fed, the governing body establishes a committee headed by the governor of the bank. Made up of nine members, the committee is comprised of four external members (who are appointed by the chancellor of exchequer), a chief economist, committee chief economist, director of market operations and two deputy governors.

The Monetary Policy Committee (MPC) holds meetings every month where it decides on interest rates and other monetary policies, with chief considerations given to the total price stability in the British economy. As such, the MPC also sets a benchmark of consumer price inflation. If this benchmark is not met, the governor has the unenviable task of notifying the chancellor of exchequer through a letter, one of which came in 2007 as the U.K.CPI rose quite sharply during the year. The release of this letter tends to be an indication to the markets of probable contractionary monetary policy. (For more on the role of the CPI, read The Consumer Price Index: A Friend To Investors.)

With a greater degree of volatility than the euro, the British pound (GBP, also sometimes referred to as "pound sterling" or "cable") often trades within a wider range through the day. With swings as large as 100-150 pips, however, it is not unusual to see the pound trade as narrowly as 20 pips. Swings in popular cross currencies can give this major a volatile reputation, with traders focusing on pairs like the British pound/Japanese yen and the British pound/Swiss franc. As a result, the pound can be seen as most volatile through both London and U.S. sessions, with smaller movements during Tokyo hours (7pm - 4am EST). (Read more about currency pairs in Using Currency Correlations To Your Advantage.)

Swiss Franc

Related Articles
  1. Trading

    Top 8 Most Tradable Currencies

    Currencies can provide diversification for a portfolio that's in a rut. Find out which ones you need to know.
  2. Investing

    Get To Know The Major Central Banks

    The policies of these banks affect the currency market like nothing else. See what makes them tick.
  3. Trading

    The British Pound: What Every Forex Trader Needs To Know

    As a strong alternative to the dollar it is likely that the pound will remain a preeminent global currency for some time to come.
  4. Trading

    Top 6 Most Tradable Currencies

    Here are six currencies that can diversify your portfolio.
  5. Trading

    The New World Of Emerging Market Currencies

    Take advantage of foreign currency markets without stepping out of your house.
  6. Insights

    Top 4 Central Banks Dominating the World Economy

    Central banks play an integral role in market economies by maintaining the stability and credibility of national currencies used in those economies.
  7. Trading

    5 Reports That Affect The British Pound

    The pound is one of the world's most popular traded currencies, and is heavily impacted by these factors.
  8. Trading

    These Are The Best Hours To Trade the British Pound

    The best times to trade the British pound are centered around economic releases at 1:30 am, 2:00 am, 8:30 am and 10:00 am U.S. ET.
Frequently Asked Questions
  1. I'm about to retire. If I pay off my mortgage with after-tax money I have saved, I can save 6.5%. Should I do this?

    Only you and your financial advisor, family, accountant, etc. can answer the "should I?" question because there are many ...
  2. My wife and I both converted our Traditional IRAs to Roth IRAs over a decade ago and have invested the maximum allowed each year since. We're buying our first home soon. Do we both qualify for one-time, tax-free, $10,000 distributions?

    You and your spouse each qualify for a penalty-free distribution of up to $10,000 for the purchase, acquisition or construction ...
  3. Is a Thrift Savings Plan (TSP) a qualified retirement plan?

    Take advantage of the government's retirement plan for employees with the Thrift Savings Plan. As with a 401(k), contributions ...
  4. Who manages the assets in a Roth 401(k) account?

    Learn how to personally manage the assets in your Roth 401(k) plan and determine the best options available to help meet ...
Trading Center