Forex Crunch Why is the Geppy So Popular?

Posted: 21 Sep 2009 02:00 AM PDT

Out of all the possible combinations of crosses, GBP/JPY, also known as the Geppy, is probably the most popular cross. Here are some possible reasons.

GBP/USD combines the British Pound and the Japanese. The most popular pair in the world is EUR/USD. The Geppy doesn’t include the Euro. Although EUR/JPY and EUR/GBP are also respected and traded, GBP/JPY is more popular.

I have the following explanation to this phenomenon:

Dollar Yen correlation: As aforementioned here, a correlation between the dollar and the Yen happens many times. This means that when the dollar weakens, the Yen weakens even more. This usually happens on risk appetite behavior. When something bad happens, the dollar and the Yen are seen as “safe haven” currencies, and in this situation, the dollar strengthens and the Yen strengthens even more.

The Pound moves faster than the Euro. When there are strong market moves in the dollar, GBP/USD moves faster and stronger than EUR/USD. This can be seen in the percentage of movement, and naturally in the number of pips.

So, in such moves, GBP/JPY makes very sharp moves. These sharp moves attract some traders.

In addition to the strong moves, there’s a lot of buzz about the Geppy on the web. For example, here’s a blog that is (almost) totally dedicated to this pair. Also in many forums, such as Forex Factory, GBP/JPY is discussed thoroughly. This buzz empowers the trade in the Geppy.

These are my explanations. What do you think about it? If you trade GBP/JPY, what are your reasons for it?