📖 Financial Lexicon Term
What is Cross Pair?
A currency pair that does not include the US dollar. Examples include EUR/GBP, AUD/JPY, and GBP/CHF.
Detailed Explanation
Historically, to exchange two non-US currencies, you had to first convert to US Dollars. A Cross Pair bypasses this step, allowing direct exchange between other currencies. Cross pairs usually have slightly wider spreads and higher volatility than major pairs.
💡 Practical Trading Example
EUR/GBP (Euro vs British Pound) is a cross pair because the US Dollar (USD) is not involved in either side of the transaction.