[XM Trading: For Beginners] What is the Pound Index? world’s four major currencies

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The pound is considered one of the world’s four major currencies, along with the dollar, the yen, and the euro. The value of the pound alone is very high, but when trading the pound, you can see the relative strength of the pound by looking at other pound combinations.

british pound

The British pound is considered one of the world’s four major currencies, along with the US dollar, the Japanese yen, and the euro. Today, the US dollar is considered the world’s key currency, but in fact, the British pound was the world’s key currency until World War II. The term British Empire is nostalgic, but there is no doubt that England was at the center of the world. Although the UK was a member of the EU for a while, it still continued to use its own currency, the pound. The value of the pound was thus preserved.

Pound is a killer currency

The pound would look good as a killer currency. This is because the pound is extremely volatile. Looking at past charts, the pound has been extremely volatile compared to the US dollar. Therefore, beginners will lose a lot, so it can be said that it is a currency for experienced players after intermediate level. GBPUSD, GBPJPY and GBPAUD are very popular, but be careful when trading.

What is the Pound Index?

The Pound Index is an index that represents the relative value of other major national currencies. If the number is rising, it indicates that the value of the pound is rising, so the pound will appreciate in the market. increase. However, when trading the pound in the actual exchange market, it is common to use it as follows.

relative strength of the pound

For example, if the pound-dollar is buying the pound and the pound-yen is buying the yen, the power relationship is established as JPY > GBP > USD. By looking at multiple pound combinations in this way, you can gauge the overall relative strength of the pound. Of course, it is important for traders to see the strength of this pound. Pound is not only pound dollar, but there are various combinations such as euro pound, pound Australian dollar, pound yen. By looking at multiple currency pairs in this way, we can see the relative strength of the pound and whether it is in a buying or selling direction.

currency index

The same goes for other currencies, not just the Pound Index. There is a dollar index, a yen index, a pound index and even a euro index. These are, of course, indices of the overall value of a national currency relative to other currencies. It is the currency index that allows you to see the overall fluctuation of the currency.

XM is recommended

XM allows you to trade not only precious metals, cryptocurrencies and stocks, but also forex. In addition, KIWAMI, an account type with narrow spreads, has also appeared. Therefore, it can be said that it is a highly recommended Forex company for trading.