What is GBP/USD (Cable)?
GBP/USD — known as "Cable" — is one of the oldest and most actively traded currency pairs in the world. The nickname dates back to the 19th century when exchange rates between London and New York were transmitted via transatlantic telegraph cable. Today, it remains among the top five most traded forex pairs globally, representing the exchange rate between the British pound and the US dollar.
For UK-based traders, Cable is the natural starting point. It's deeply liquid, has tight spreads at leading brokers (often 0.5–1.5 pips), and is heavily influenced by news and data that UK traders are already following — Bank of England meetings, UK employment figures, GDP releases and political developments.
What Drives GBP/USD?
Bank of England (BoE) vs Federal Reserve (Fed)
The primary driver of GBP/USD is the interest rate differential between the Bank of England and the US Federal Reserve. When the BoE raises rates relative to the Fed, sterling tends to strengthen against the dollar — and vice versa. Traders closely monitor BoE Monetary Policy Committee (MPC) minutes, quarterly Inflation Reports, and speeches by the Governor for forward guidance on rate direction.
Similarly, US Federal Open Market Committee (FOMC) decisions, dot plots, and Fed Chair statements move the dollar side of the pair significantly. A hawkish Fed (signalling rate hikes) typically pressures GBP/USD lower, while a dovish pivot tends to lift it.
UK Economic Data
Key UK data releases that consistently move Cable include: Consumer Price Index (CPI), the employment and wages report, retail sales, and GDP estimates. The first Friday of each month also sees the US Non-Farm Payrolls (NFP) release, which is one of the highest-impact events for GBP/USD. Spreads often widen around these releases, so be aware of execution risk.
Political Risk & Geopolitics
Brexit redefined the structure of GBP/USD volatility. Since 2016, political uncertainty — from the initial referendum shock to ongoing post-Brexit trade negotiations — has added a persistent risk premium to sterling. UK political instability (prime ministerial changes, fiscal policy shocks such as the 2022 mini-budget) can cause sharp, sudden GBP moves that technical levels alone won't predict.
Key Levels to Watch
GBP/USD is a heavily watched pair with well-defined technical levels. Round numbers such as 1.2000, 1.2500, 1.3000 and 1.3500 act as major psychological support and resistance zones. These levels often coincide with option barriers and institutional positioning, making them particularly significant.
The 200-day moving average is widely followed as a long-term trend indicator. Price action around it — especially closes above or below — often leads to sustained directional moves. Fibonacci retracement levels from major swing highs and lows also play a key role in Cable's technical behaviour.
Trading Sessions & Best Times
GBP/USD is most active during the London session (8am–4pm GMT) and especially during the London/New York overlap (1pm–5pm GMT). Volume and volatility spike around UK and US data releases. Avoid holding positions through major events unless you have a clear risk management plan — spread widening can be significant.
Overnight (Asian session) liquidity is much thinner. Moves during this period are often noise rather than signal, and spreads may widen at less liquid brokers.
Typical Spreads
At leading ECN/STP brokers like Pepperstone and IC Markets, GBP/USD spreads during normal market conditions average 0.5–1.0 pip on raw accounts (plus commission). Market maker accounts at IG or CMC typically show fixed or variable spreads of 1.0–1.5 pips. Spreads widen significantly during news events and around market open/close.
Risk Management
Cable can move 100+ pips in a single session on a major data release. Always use stop-losses and size positions according to your maximum acceptable loss per trade — not by how many lots "feel right." A general rule for beginners: risk no more than 1–2% of account equity per trade.