What Is The London Fix? What Volatility Impact Does It Have On Currencies?

Knowing the time of the fix is important, but knowing what type of volatility you can expect and how to protect your trades from it is even more important.
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Giles Coghlan
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The London Fix And Its Volatility Impact

You may have heard that there’s some downside in cable which the pound/US dollar pair and the explanation given it, it may be some moves just prior to the London Fix. Now, just to give you a bit of background.

The London Fix occurs around four o’clock GMT time. Now not everyone who is purchasing or selling currencies is a speculator. A number obviously, of businesses, if they’re transpiring wages at the end of the month, perhaps they’re reallocating resources or companies making transactions.

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All those kinds of payments that have to take place and exchanges that have to happen, a lot of banks will do them at the same time each day, at the London Fix, its the four o’clock London Fix.

At four o’clock GMT time, and now we’re 10 minutes away, and now this is also month end and it’s quarter end. So that means there could be a large buildup of perhaps some quite significant currency transactions that have to be made.

As a result, we can see some volatile price action around this time. So it’s always worth being aware of.

At four o’clock at the London Fix, we may see some volatility, so keep an eye open for a price action. We see at today’s London Fix, and remember because it’s month end and quarter end, it’s possible to have a more extreme reaction.

So, you know, moves of sort of 30, 40 points for no apparent reason, often can be attributed to the London Fix at around four o’clock GMT. Keep your eyes peeled for what happens at today’s Fix.

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