The Best Pairs to Trade During the London Session

London is considered the forex capital of the world. The London(European) session accounts for 43% of the total transactions that take place on the markets. This session is characterized by high liquidity, increased volatility, and low bid/ask spreads on most pairs. While it is recommended to trade during the London session, it doesn't guarantee that you’ll make profits. If you pick the wrong pair, your chances of becoming profitable will be very slim. Choosing the right pair is the most effective way to capitalize on this session. Here are some of the best pairs to trade during the London session.

1. EURUSD

EURUSD is the most traded pair accounting for about 24% of the transactions done in the forex markets. Economic reports from the Eurozone are usually released during the London session. Since news events affect the volatility of this pair, it makes sense to trade it during the London session. The Euro and the Pound are usually more volatile during the London session. Likewise, the US Dollar is more volatile when the New York session is open. You may find it helpful to trade EURUSD when these two sessions are open. The overlap occurs between 1300 and 1600 GMT.

During these three hours, EURUSD is traded in high volumes. The increased liquidity allows traders to trade the pair at very low spreads. Also, during the London session, traders are able to predict EURUSD movements better due to its stable market conditions. Additionally, the pair is less volatile making it ideal for novice traders. Reduced volatility allows traders to manage their risk more effectively.

2. GBPUSD

GBPUSD represents the currencies of two large economies, Great Britain and the United States. According to UK Forex Brokers, GBPUSD is the third-most traded pair on the forex market. It is traded in large volumes and has tight bid/ask spreads during the London session. Economic reports from Great Britain are released during the London session. Some of the reports include GDP, employment, and interest rate reports. These reports have a significant effect on the volatility of GBPUSD. That's one reason why most traders prefer trading this pair during the London session.

GBPUSD is more volatile than major pairs such as EURUSD and USDJPY. It has rapid price fluctuations as well as more significant trends than other major pairs. This increased volatility is an added advantage for any trader with the right skill set. You can earn a significant amount of profit from this pair.  The London session provides plenty of setups for both technical and fundamental traders. It is easy for technical traders to conduct their analysis of GBPUSD because the market is stable. The pair also positively correlates with EURUSD making it even easier to predict.

As mentioned, economic reports from Great Britain are released during the London session. Thus, fundamental traders can capitalize on these news releases. News releases from the United States also have a significant impact on this pair. Reports such as the Nonfarm Payrolls are usually released during the New York Session. This means that you can also trade GBPUSD during the London-New York overlap and still be profitable. The London-New York overlap happens between 1200 and 1600 PM GMT. This period is characterized by high volatility, low spreads, and minimal slippage on trades. It presents plenty of opportunities for scalpers and day traders.

3. GBPJPY

The London session opens at 0700 GMT while the Asian session closes at 0800 GMT. The London-Asian overlap happens between 0700 and 0800 GMT. Yen pairs tend to be volatile during this window. Likewise, the Pound pairs tend to be very volatile during London open too. The two currencies that make up this pair are traded in high volumes. The Yen is the 3rd most-traded currency while the Pound is the fourth most-traded currency on the forex markets. This makes GBPJPY one of the most liquid pairs.

The GBPJPY is popular for its high volatility. Trading opportunities are plentiful during the London session since the pair makes some significant price swings. Besides volatility, GBPJPY has a higher hourly pip movement compared to major pairs. It has an average hourly pip movement of 53.6 pips. Scalpers and short-term traders can make massive profits with this fast-moving pair. The volatility of GBPJPY can sometimes be a double-edged sword. If you are an experienced trader, you can become extremely profitable with this pair. However, if you are a beginner, you may find it helpful to start with less volatile pairs such as EURUSD.

4. EURGBP

EURGBP is one of the most popular cross pairs on the forex market. The Euro and the Pound are actively traded during the London session. There’s plenty of economic data from the Bank of England and the European Central Bank being released during the London session. These reports result in considerable price movements for both currencies.

EURGBP is more liquid during the London session. Therefore, its bid/ask spreads during this session are relatively low. This pair has low volatility compared to most cross pairs. It has an average hourly pip movement of 16.6 pips. It’s therefore ideal for traders who want to grow their accounts steadily.

5. EURJPY

EURJPY is another cross-pair with decent volatility. It presents plenty of trading opportunities during the London session. This pair is especially volatile during the Asian-London overlap which occurs between 0700 and 0800 GMT. Most cross pairs have wider spreads than major pairs. However, the Euro is traded in large volumes during the London session. The increased volume helps to lower the bid/ask spreads on this pair. Additionally, the economic reports released during the London session result in larger price moves for EURJPY.

Key Takeaway

The London session is the largest trading session on the forex markets. The Euro and the Pound are the most actively traded currencies during this session. Therefore, EURUSD, EURGBP, EURJPY, GBPUSD, and GBPJPY are some of the most promising pairs to trade during this session. These five pairs have high liquidity and offer plenty of trading opportunities during this session. Since they are traded in large volumes, their bid/ask spreads are relatively low. Additionally, economic reports from the Eurozone and Great Britain are usually released during the London session and they result in significant price movements on these pairs.