Currency Pair

What is a currency pair?

For currencies traded on a foreign exchange or foreign exchange market, a currency pair is the value of one currency relative to another. For example, USD/GBP can be written as: USD/GBP.

Where have you heard of currency pairs?

If you have ever bought and sold currencies in the forex market, you will have heard of currency pairs. Television reports on financial markets usually refer to the day's major currency movements.

The information you need to know about currency pairs...

The reason why currencies appear in pairs in the foreign exchange market is that as long as you buy a currency, you have to sell another currency.

For example, the currency pair comes in this way: USD/GBP.

The first currency shown (such as the US dollar here) is the base currency. The second currency shown, such as the British pound here, is the quote currency.

The base currency (like the US dollar here) is the currency you are looking to buy or sell. The quote currency (pound sterling, here) is the amount of money spent to buy a unit of the base currency.

If the USD/GBP exchange rate is 0.8, it means that you will spend £ 0.80 on one dollar. Correspondingly, if the GBP/USD exchange rate is 1.25, it means that you will spend $1.25 to buy one pound. Exchange rates will fluctuate according to relative value movements between the pound and the dollar, as well as other currencies.