Cable is the trading term for the GBP/USD currency pair, tracking the exchange rate between the British Pound and US Dollar. The name originates from the historical practice of transmitting foreign exchange rates via telegraph cables beneath the Atlantic Ocean, connecting London and New York.
How Cable Trading Works
Traders speculate on GBP/USD by buying when they expect the pound to strengthen and selling when they anticipate weakening. Cable is one of the most liquid currency pairs in the world, with high daily trading volumes from banks, hedge funds, and retail traders.
What Drives Cable Prices
Cable movements are primarily driven by economic releases from both the Bank of England and Federal Reserve—employment data, GDP reports, inflation figures, and interest rate decisions. Geopolitical events and trade sentiment between the UK and US also influence the pair significantly.
Trading Volatility and Risk
Cable is known for rapid price swings, especially around scheduled economic announcements. A central bank policy decision or surprising economic data can trigger sharp movements within minutes. Traders must use stop losses and proper position sizing to protect against these sudden swings and manage the leverage available in forex trading.
