“Cable in Forex” it sounds cryptic, right? Well, it’s simply a nickname for the GBP/USD currency pair, representing the British Pound against the US Dollar.
This pair is one of the oldest and most actively traded in the forex market. Let’s break down why it’s called “Cable,” what influences its price.
In This Post
Why is it called “Cable”?
Back in the mid-19th century, before the internet, transatlantic communication relied on a submarine telegraph cable laid across the Atlantic Ocean.
This cable connected London and New York, facilitating communication for financial transactions, including exchange rates.
This cable became connected with the exchange rate between the British Pound and the US Dollar, hence the nickname “Cable.”
What Moves the Cables?
Several factors can cause fluctuations in the GBP/USD exchange rate and the include:
GDP growth, inflation rates, employment figures, and manufacturing data from both the UK and the US heavily influence the Cables.
Strong economic data from either country can strengthen its currency.
Central bank decisions on interest rates (the Bank of England for the Pound and the Federal Reserve for the Dollar) are crucial.
Higher interest rates often attract foreign investment, increasing demand for that currency.
Political Events
Political instability, elections, referendums (like Brexit), and policy changes in either the UK or the US can create volatility in the GBPUSD.
Overall market risk appetite also plays a role. During times of economic uncertainty, investors often flock to the US Dollar as a safe-haven asset, which can weaken the Cables.
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