Trade Forex as Sterling Falls Following BoE Announcement

LONDON, June 18, 2012 /PRNewswire/ --

On Friday, June 15, the pound fell against the US dollar following the Bank of England's announcement of an emergency liquidity package the day before. But how will you profit from this fall?

In the guide below, we show you how you can profit from the depreciating sterling through a spot forex trading account from City Index.

BoE Announces Emergency Liquidity Package

On Thursday evening last week (14 June), Governor Mervyn King suggested more quantative easing (QE) could be on its way as the Bank of England announced an emergency liquidity package to support the British banking system.

In his keynote speech, King said that the BoE would also be providing cheap long-term funding to encourage lending to businesses and consumers.

Pound Depreciates against Dollar

Whilst many investors in the marketplace said the measures planned by King would support the UK economy; further suggestions of monetary easing prompted investors to sell-off sterling in early London trade on Friday (15 June).

How to Trade Forex

With a City Index forex trading account you can take a position on the future price movement of 37 currency pairs within the foreign exchange market.

As a global currency market - trading 24-hours a day from Sunday evening to Friday night - forex offers traders multiple opportunities to potentially profit from fast-moving major, minor and exotic currency pairs.

Unlike in traditional equity markets, trading forex with City Index allows you to profit from market movements - regardless of whether they are rising or falling.

With this in mind, using the example above whereby the pound depreciates against the US dollar - traders have the potential to 'go short' and sell the pound with the aim of potentially profiting from every pip that it depreciates further.

In addition, as a leveraged product - forex trading requires only a small percentage of the underlying market's total value as an initial deposit.

This enables traders to control a relatively large exposure for only a small amount, gain greater access to the global currency markets and possibly magnify gains.

It is important to remember, however, that as a leverage product, you also run the risk of losing more than your initial deposit. A forex risk management strategy should be used in order to limit potential losses.

Start Trading Forex

To start trading forex across a range of trading platforms - including mobile - you can apply for a forex trading account with City Index through their website: http:http://www.cityindex.co.uk

Read More Forex Trading Tips

If you found this article helpful, you may want to read more just like this. You can access a range of free forex trading tips, guides and articles through the City Index website also.

About City Index:

Today more and more individual traders are discovering the benefits of derivatives, and many of them are discovering them through a City Index trading platform.

As a group, we transact in excess of 1.5 million trades every month in over 50 countries. We provide access to a wide range of instruments including margined foreign exchange, CFDs and, in the UK, financial spread betting.

We constantly look to improve the performance of our platforms and expand our range of services. The result is our customers benefit from innovative trading tools with transparent pricing, competitive spreads, and a high standard of customer support. Visit http://www.cityindex.co.uk/ for details.

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SOURCE City Index