The British Pound (or pound sterling) is the world’s oldest currency still in use dating back to Anglo-Saxon England in the middle 8th century. It’s the official currency of the United Kingdom, its Crown Dependencies, and the British Overseas Territories. The pound is the fourth most traded currency in the foreign exchange market after the U.S. dollar, the Euro, and the Japanese Yen. It’s also the third most held reserve currency on the global reserves.
The British Pound currency futures contract provides a vehicle to assess the relative value of the US dollar compared to the pound, manage risks associated with currency rate fluctuations in the currency markets and to take advantage of profit opportunities stemming from changes in rates.
The futures contract trades on the Chicago Mercantile Exchange’s (CME) trading floor during open outcry trading hours as well as the CME Globex platform. The pit futures contract trades on the floor from 7:20 AM CT to 2:00 PM CT, Monday through Friday. On Globex, the futures contract trades virtually around the clock. The market opens at 5:00 PM CT and closes the following day at 4:00 PM CT.
One futures contract is 62,500 British Pounds and is pegged to the US Dollar.
The performance bond or initial margin requirement to initiate one futures contract is 2.09% or $2,025 (as of July 6, 2012). To control that futures contract going forward, the maintenance margin becomes 1.55% or $1,500 (as of July 6, 2012).
One price increment or “tick” is $6.25. Therefore a full point move, 1.5400 to 1.5500 for example, is $625.
The futures contract month listings are March (H), June (M), September (U), and December (Z).
The futures contract’s Last Trading Date (LTD) is the second business day immediately preceding the third Wednesday of the contract month which is typically a Monday. For example, the September 2012 British Pound currency contract LTD is September 17, 2012.
If a contract is held until expiration the settlement procedure is a cash settlement in accordance with the CME Daily FX Settlement Procedures.
Use stop loss and target orders as this particular market trades virtually around the clock (including while the European markets are trading from 2:00 AM CT to 10:30 AM CT) and is susceptible to outside markets and fundamental influences.
Visit our Markets section for additional contract specifications and market information regarding the British Pound futures market.