Exports teach us how countries are interacting with each other. A major currency move might be directly related to exports. Unless you know what a country exports and who it exports to you might miss out on the currency rate change. The answers teach us which industries to follow for any currency. In this example and tutorial on the GBP you learn about FX trading by watching news for export industries and countries that receive the exports.
FX Trading GBP’s Exports
The GBP is called by many names on TV and in news articles. You might hear it referred to as the British pound, sterling or cable. Technically the cable is the GBP/USD pairing, but many have confused it with GBP, thus the trading jargon. However you find it referred to as, you definitely need to understand how the exports affect the currency by learning what they are.
Exports for Britain and all of the United Kingdom are fuels, manufactured goods, beverages, food, chemicals, and tobacco. According to FX trading details most of the exports are manufactures followed very closely by other commercial services. Exports total more than $500 million USD. You would want to watch the industries that these exports belong to in order to figure out what might make the currency move. It is just a piece of the puzzle, so do not get lost in looking at only the exports. It is helpful to know what they are and what industries to watch, but always remember there are two currencies in the puzzle. You also need to watch industries in the other currency.
FX trading is more than just one currency or country’s economy. It is about a grouping where sometimes you might have a better pair with the GBP than the USD. The AUD might be more favourable. Perhaps the Euro is even better. There are also times when both the GBP and Euro are trading in the same direction, which means it matters to whom the exports are going.
FX Trading GBP Exporting To
Exports definitely go to the European Union countries in terms of majority. Roughly 55 per cent of all exports are headed into Europe. There are more than 20 countries in the Union, so take note of the E.U. countries and their currencies to watch for FX trading.
The United States receives almost 15 per cent of the exports. Again it is not a surprise that the United Kingdom should export to the USA, but you want to watch this relationship to see if there are other effects in the works.
China, Switzerland, and Canada receive a small percentage of exports too. You should definitely keep an eye out for these countries and their currency movements. Even though exports can matter to a currency movement in which the domestic currency should get stronger this is not always the case with FX trading. Other factors can be a part of currency movements which is why you see GBP and AUD movement without exports being involved.