What is shorting the pound? The foreign exchange market is the largest trading venue in the world, with trillions of dollars changing hands every day. That huge volume creates arbitrage opportunities for speculators, who take positions in the hopes that a currency will rise or fall against other currencies. When these traders are right, they can make enormous profits or, when they are wrong, suffer large losses.

What is the strongest currency in the world?

One of the biggest forex trades in history was made by George Soros, who shorted the pound during a political crisis that devalued the British currency by more than 25%. Soros was able to turn that decline into a personal windfall of more than $1 billion, which shows the potential for profit when paired with an understanding of the factors that influence GBP/USD and other major currencies.

Traders can short the pound by selling contracts for difference (CFDs) on platforms like ETX Capital, where you can get tight spreads, no hidden fees and access to 12,000 instruments. When you short the pound, you are betting that the currency will decrease in value against other currencies. That can be influenced by a variety of factors, including interest rates, economic data and significant news events. For example, when the Bank of England raises interest rates, it may attract investors and speculators to the currency, which can increase its value. Conversely, if you believe the Bank of England will lower interest rates, then you might want to short the pound.