Currency Pair

Quick definition

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Updated: Jan 20, 2023

A currency pair is a price quotation of two different currencies. 

Key details

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  • Currency pairs are exchange rate quotes for two different currencies, the first listed is known as the ‘base’ and the second is the ‘quote’.
  • Each currency pair is listed as a three letter code with the first two letters representing the country and the last representing its currency.
  • When a currency pair is traded, the first listed currency (base) is bought, while the second listed currency (quote) is sold.

What are currency pairs?

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Currency pairs are what traders buy or sell on the foreign exchange market. They are quotations of two different currencies. Usually, after a pair is listed, you will see a series of numbers or prices. These numbers represent the exchange rate between the currencies.

As the name suggests, currency pairs always come in twos. The first listed currency is known as the base, while the second is known as the quote. When a pair is traded, the base is bought, and the quote is sold. Currency pairs compare the value of one currency to another and indicate how much of the quote currency is needed to buy one unit of the base currency.

Each pair is listed as a three letter code. The first two letters represent the country and the last represents the country’s currency. If we look at the British Pound, for example, its three letter code when listed is GBP. The G and B represent Great Britain and the P represents the pound. 

Currency pair categories

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Pairs are allocated to three main categories which are determined by the volume of trades. These groups are known as majors, minors, and exotics. 

Majors are the largest and most traded currencies against the U.S Dollar and include pairs such as EUR/USD, GBP/USD and USD/JPY. Major currency pairs, generally, are the most liquid markets and most commonly traded in the world. 

Minor pairs, also known as ‘crosses’, are usually not as liquid and are traded less than majors. Individual currencies that form part of the majors group are often traded as crosses, such as GBP/JPY and EUR/GBP.

Last of the three are exotic pairs. These types of pairs are less frequently traded, offer less liquidity, and include currencies from emerging markets. PLN/HUF (Polish Zloty/Hungarian Forint) being an example of an exotic pair. 

Where can I learn more?

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For more information about currency pairs and other forex related information, check out our courses. Alternatively, scroll to the bottom of this page where you can click links to specific forex definition pages. 

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Prash Raval
Financial Writer
Prash is a financial writer for Invezz covering FX, the stock market and investing. For over a decade he has traded spot FX full time while... read more.