GBP mimics Euro?

[Daver421]

Hi everyone,

Someone on this forum had told me that the GBP/USD generally mimics the movement and trend of EUR/USD. I noticed that that really is true. When Euro is trending, GBP is trending. Same thing with being in a trading range.
What is the reason for this? Is there a strong signal being suggested if GBP and Euro move in opposite directions?

Dave

[eternalfuture]

Daver421,

I usually treat the two separately.

When the prime mover is USD, you can expect EUR and GBP move in the same direction, assuming their cross rate (EUR/GBP) remains stable.

When the prime mover is EUR, especially if EUR strengthens against GBP, signalled by the rise in EUR/GBP, then EUR/USD may rise, while GBP/USD can be either stagnant or falling.

There's only indication that the EUR/GBP influence is at work when the two don't move toward the same direction.

Cheers!