Inside the Currency Market: Mechanics, Valuation, and Strategies

British Pound/U.S. Dollar

In U.S. markets, British pound is the yield seeker against Treasury Bonds and the U.S. dollar is the bond follower. In London trading, U.S. dollar is the yield seeker to British gilts and the British pound is the gilt bond follower. In European trading, U.S. dollar is again the yield seeker to German Bonds while British pound holds a static position. That static position is derived from London and German stock market trading that overlaps from the open to close. Yet the latter part of European and London trading rolls into U.S. trading. The British pound will always take precedence in U.S. markets because it must seek its yield, and no better market exists where yield can be earned. As we view trading strategies in later ...