EURGBP lagging EURUSD and GBPUSD: real, but smaller than the spread

[Amanhasnoname]

Three currency pairs linked through EUR, GBP and USD cannot drift apart for long. If EURUSD jumps and GBPUSD stays still, EURGBP has to move, or an arbitrageur steps in. That relationship is the basis of the idea that the cross "lags" and can be front-run.

In practice the lag is measured in fractions of a second between professional feeds, and the mispricing is usually smaller than the cross's own spread. A retail feed adds its own delay and rounding on top. By the time an indicator on a retail platform shows EURGBP catching up, the gap has typically closed.

Where the triangle still helps is as a sanity check rather than a trigger. When EURUSD and GBPUSD rise together and EURGBP stays flat, the move is dollar weakness. When EURUSD rises and GBPUSD falls, the move is euro-specific or sterling-specific, and EURGBP will be the cleaner chart for it. That distinction tells a scalper which pair to trade.

Test it by calculating the implied EURGBP from the two USD pairs and plotting the difference against the quoted price. Count how many times the gap exceeds the spread.

If anyone has measured that gap on a retail feed, how often did it clear the spread by enough to trade?