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EUR/GBP and GBP/EUR

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Hi all,

Maybe a silly question from a newbie, but why do these two pairs exist? Are they not the same in reverse? Makes sense the charts should echo my thoughts, which they do, so why not just one pair vs. reverse them for existence? Also EUR/GBP has tighter stop loss and tighter spread than GBP/EUR, so why go into trading GBP/EUR then, rather than stick with EUR/GBP?

Looking forward to reading the obvious answer unknown to me - thanks in advance for letting me know!

Cheers, LB

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Hi @mella,  they are two separate markets with different participants so though highly correlated they won't be exactly the same.

The main reason for the two markets is currency conversion to trade goods and services backward and forward between UK and EU (of particular importance to the UK) and the convenience of having the choice of switching the base and quote currency around.

The base currency plays the role of the commodity (it is bought or sold) while the quote currency is the money so in eurgbp you are buying eur with gbp.

The difference in spreads and stops reflect the difference in the level of traffic on each market. 

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Just to add to the discussion.

EURGBP in the interbank market is dwarfed by GBPUSD and EURUSD. These two pairs drive a lot of the EURGBP price action, so often GBPUSD or EURUSD will move which results in a move in EURGBP (due to the "triangular" nature of the 3 pairs):

Capture.PNG.8688f6d0d13a5d7316537ac638f6f5be.PNG

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