EUR/USD vs GBP/USD: Which Currency Pair Should You Focus on First?
- Ethan Williams
- Sep 3
- 3 min read
As you begin your venture into trading forex, perhaps the most critical decision you can make is which currency pair to become involved with. Among the most traded and liquid pairs currently available in the marketplace, two stand out: EUR/USD and GBP/USD. According to each, both have inherent characteristics that define them, trading behaviours, and economic forces. But if you're an amateur or even a seasoned trader who wishes to improve your strategy, the question is always: which do you work on first?
In response to this, let's discuss the significant differences, similarities, and trading considerations of the two pairs, along with when it's best time to trade GBP/USD and how total trading hours impact your decision.
Learning the Basics
The most widely traded currency pair in the world is the EUR/USD (Euro/US Dollar). It represents the two biggest economies, Europe and the United States, and usually provides high liquidity, tight spreads, and decreased volatility in calm market conditions, especially during overlapping forex trading hours. GBP/USD (British Pound/US Dollar), or "Cable," is the third most liquid pair. Being highly liquid itself, though more volatile, it is because the pound responds more to UK economic news and political announcements, particularly during active forex trading hours.
Liquidity and Volatility
Liquidity is a description of how easily a currency pair can be purchased or sold without influencing its price. High liquidity usually translates into tight spreads and minimal slippage—excellent for beginners and experts alike.
• EUR/USD: Most liquid of all pairs. Spread is typically the tightest, and therefore cheapest, for regular trading. Price movement is very smooth unless interrupted by significant news.
• GBP/USD: Though still liquid, GBP/USD has slightly wider spreads than EUR/USD. It also has more volatile price action, larger potential gains, but greater risk.
If you’re looking for a more stable pair with consistent behaviour, EUR/USD may be a better start. If you’re comfortable with slightly more risk and volatility, GBP/USD can be rewarding.
Economic Influences
Both currency pairs are heavily influenced by economic news but from different regions.
• EUR/USD responds to both ECB and US Federal Reserve interest rate decisions, inflation reports, and employment data.
• GBP/USD is influenced more than EUR/USD by Bank of England comments as well as political events like Brexit or the UK election.
Therefore, a trader needs to monitor local news and economic indicators with varying effects on such currencies.
Best Time to Trade GBP/USD and EUR/USD
Forex trading hours are essential in deciding which pair to trade. The forex market is open 24 hours, five days a week, but the quality of these hours varies.
• London and New York: These are the busiest sessions, particularly the overlap between 1 PM and 4 PM GMT.
• When to trade GBP/USD: When the London session (8 AM - 5 PM GMT) is active, and particularly the London-New York overlap. The pound is most actively traded when the UK markets are open.
• When to trade EUR/USD: Though active during London hours, EUR/USD is well behaved in both London and New York sessions, so it is most suitable for cross-time-zone traders.
Which One Should You Focus On First?
Between EUR/USD and GBP/USD, most new traders should start with EUR/USD. It is less prone to sudden, crazy price movements than GBP/USD, the famously volatile one that's prone to UK-related news. The US dollar and euro also enjoy more regular economic coverage and broader global follow-through, underpinning more balanced, more liquid price action.
Alternatively, consider using GBP/USD if you already grasp the market fundamentals and seek more active trading opportunities during London and New York forex session hours. The pairs are both worth it in the grand scheme of things, though EUR/USD will be the better choice for you to learn first as a beginner, so you can build up your confidence and experience before attempting the more unstable dynamics of GBP/USD.
Some traders use both, trading EUR/USD during calm markets and GBP/USD when volatility can lead to better profits.
Conclusion
Both GBP/USD and EUR/USD are good pairs for the trader. Both of these pairs are most covered in analysis and news and are very liquid. This provides the easiest way to obtain tips. Your selection should be made keeping in mind your trading experience, risk capacity, and schedule available according to forex trading hours.
If you're still in doubt, play demo trades for both pairs to observe how they behave before applying real capital. When you feel more comfortable, you can expand into both and other pairs, too.
Whether you remain with the Euro or transition over to the Pound, the secret to final success is learning about market timing, news events, and currency behaviour.
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