Lead and lag between EURUSD and GBPUSD

[Fairman]

Lead and lag between EURUSD and GBPUSD

The two pairs share the dollar leg, so they usually move together. But not at exactly the same moment.

EURUSD is the deeper market, with more participants and faster quote updates. When dollar news hits, EURUSD tends to react first by a fraction of a second, and GBPUSD follows. The delay can be 50 to 300 milliseconds.

On a retail platform, the lag is small but sometimes visible on a tick chart. A burst in EURUSD with GBPUSD still flat suggests the cable move is coming, in the same direction.

A more modest use is as a confirmation filter. A breakout on GBPUSD that isn't matched by EURUSD is suspect, since it suggests a sterling-specific driver or a thin market spike.

When the two disagree for more than a few seconds, a UK headline is usually responsible. That's a signal to look at the news feed, not at the chart.

On a tick chart at retail speeds, is the EURUSD lead visible or does it vanish?