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Most currency value quotations have the US dollar (USD) as its base currency (direct quote). Therefore it is easy to determine the expense as it is always one US dollar equals whatever price the quote forex is exhibiting. On the other hand, there are exceptions to this rule. There are four currency pairs that entails the US dollar but in which the US greenback is not the base forex but the quote currency (indirect quote).
The Australian greenback (AUD), the British sterling Pound (GBP), the Euro greenback (EUR), and the New Zealand greenback (NZD) are the four currency pairs in which the US dollar is not the base forex but the quote currency.
For case in point, a selling price quote on the GBP/USD of 1.8800 would indicate that 1 British Pound is equal to one.8800 US bucks. Likewise, if the value the GBP/USD forex pair increases it would mean that the British Pound (GBP) has appreciated from the US dollar or that the US dollar has weakened in opposition to the British Pound (GBP).
Conversely, if the selling price the GBP/USD forex pair goes down it would signify that the British Pound (GBP) has weakened in opposition to the US dollar or that the US greenback has strengthened in opposition to the British Pound (GBP).
Finally, there are 3 sorts of quotes. To start with, a direct quote where the US greenback (USD) is reflected as the base forex. Second, an indirect quote the place the US greenback (USD) is reflected as a quote forex rather than a base forex (as higher than illustration). Third as a cross quote exactly where the US dollar (USD) is not quoted in the currency pair, e.g. GBP/EUR.
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