GBP-HUF

GBP/HUF is the ticker symbol for the British Pound to Hungarian Forint exchange rate on the Forex market. The British Pound/ Hungarian Forint currency pair (GBP/HUF) tracks how much the GBP is worth against the HUF.

The GBP/HUF is an interesting forex pair that couples two economies that do not use the euro. It’s considered a minor pair but historically it has demonstrated high volatility thanks to the exotic Hungarian forint and the relatively stable base of the pound sterling, which gives to forex traders the opportunity to diversify their portfolio and potentially capitalize on strong price movements. Trading the pair during its peak market hours, i.e.  London market hours, or between the hours of 8 am and 5 pm GMT can help traders make the most of the GBP/HUF liquidity.

GBP/HUF Trading History

The GBP/HUF pair combines two currencies backing two very different economies. The pound is the currency of the UK – a crucial center of global finance, the 4th most actively traded currency in the foreign exchange market, and one of the world’s major reserve currencies. Meanwhile, the Hungarian economy is much smaller, producing a nominal GDP of US$155 billion.

Having its roots in continental Europe, the British pound’s name is derived from the Latin word “poundus” meaning “weight”, while the “£” symbol comes from an ornate “L” in Libra. The pound first became a unit of currency in 775AD in Anglo-Saxon England, and was equivalent to 1 pound weight of silver.

The forint on the other hand, is a relatively “younger” currency as it was introduced as Hungary’s official monetary unit in 1946. After World War II Hungary began paying off its debts through the printing of money, which created massive inflation. The forint’s predecessor was the pengö, which was replaced at a rate of 400 quintillion pengö to 1 forint. The forint was originally pegged to the price of gold until 2008. It’s important to note that although Hungary is a member of the EU, it has not joined the eurozone and has hence not adopted the EUR.

Looking at the last 14 years, the trend for GBP/HUF has been positive since the Hungarian forint became free-floating in 2008.

GBP/HUF Trading – Highs and Lows

The GBP had its fair share of headwinds as a standalone currency starting World War I, when the British government was forced to devalue the pound considerably. A significant drop in the value of the pound also came with the outbreak of WWII which led the British government to peg the value of the pound to the dollar. In 2008, the Lehman Brothers’ demise triggered the global financial crisis pushing the GBP lower just as the HUF came off the gold standard, leading to some steep losses in the GBP/HUF. The pair proceeded to recover to peak near 450HUF by early 2016 while in August 2022 the pair reached an all-time-high of 492 HUF as Hungary grappled with rampant inflation.

Why Trade GBP/HUF?

While the GBP/HUF pair attracts less trading interest than other major currency pairs, such as the euro (EUR/USD) and yen (USD/JPY), it can still offer high liquidity during its peak trading hours, and can provide a number of trading opportunities. What is more, rising tensions in Europe which began with the Russia-Ukraine war combined with rising inflation, a battered economy, and corruption concerns are causing major volatility in the HUF.

Major Data Influencing GBP/HUF

Here are some of the factors to look out for when trading the GBP/HUF:

Central Bank Monetary Policy

When corresponding central banks like the BoE (Bank of England) or the Magyar Nemzeti Bank (Hungary’s central bank) make changes to their monetary policy, for example, by hiking key interest rates, this can disrupt demand for the GBP/HUF. Keeping an eye out for major Central Bank announcements that can affect the GBP/HUF pair can help traders better gauge the pair’s future performance. Meanwhile, major discrepancies in monetary policy between the two nations’ central banks can also account for increased volatility in the pair.

Inflation

All economies are subject to inflation, and when a currency inflates, its strength relative to other currencies must decrease to reflect a balance in prices for goods and services. For example, in August 2022, due to rising energy prices, a war in Ukraine, natural disasters, and in the aftermath of Covid-induced monetary stimulus, inflation rates for both nations skyrocketed, rising to a record-breaking 15.6% for Hungary and 9.9% for the UK.

Economic Data Releases

Economic releases including local CPI (inflation) data, employment data, gross domestic product (GDP), retails sales, purchasing managers index (PMI) and other key reports can have a major impact on their respective currency’s price action.

Politics

Geopolitical tensions such as trade wars, elections and even disruptions to oil production tend to introduce instability which reflects in the overall forex market.  For example, Hungary borders with Ukraine, yet the country’s Prime Minister has repeatedly expressed his pro-Russian views in 2022 and called for the abolishment of Russian sanctions. This in turn caused the EU to caution Hungary and the HUF to plummet.

Day Trading the GBP/HUF Pair

The GBP/HUF forex pair offers traders a variety of short- and long-term opportunities – and while the forex market is open 24 hours a day, 5 days a week – the best times to trade the GBP/HUF are during London market hours, or between the hours of 8 am and 5 pm GMT.

GBP/HUF Volume and Volatility

As noted above, there are specific times when certain pairs are most volatile. Significant movement in the GBP/HUF usually occurs when the European trade session opens. This is between 08:00 to 17:00 GMT. However, volatility cab also be expected during economic data releases for the UK, Hungary and the Eurozone, which typically occur between 07:00 to 10:30 GMT. That being said, breaking news announcements can trigger a flurry of trading activity for the GBP/HUF pair.

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