What is a cross currency pair?

A cross currency pair, also known as a cross, is a currency pair that excludes the U.S. dollar.

Back in the day, if someone wanted to exchange for another currency, they first had to exchange their currency for dollars, and then dollars for the currency they needed.

For example, if someone wants to convert pounds into yen, they first need to convert pounds into dollars and then dollars into yen.

The appearance of cross currency pairs allows currency traders to bypass the tedious process of converting their currencies into dollars, and they can freely exchange their currencies directly into the currencies they want to exchange. Some common cross currency pairs include: GBP/JPY, EUR/JPY, EUR/CHF, and EUR/GBP.

Calculate cross exchange rates

Warning: This section is a bit boring, unless you are interested in numbers. The good news is that this section is actually not that important, because the vast majority of trades have already calculated the exchange rate of the cross currency for you.

However, if you are the kind of person who wants to learn more, then this section is perfect for you to learn. Also, having a strong thirst for knowledge is always good, right?

In this section, we will show you how to calculate the bid and ask prices for cross-currency pairs.

For example, we want to know the buy/sell price for GBP/JPY. First, we need to find the bid price for GBP/USD and USD/JPY.

Why these two currency pairs?

Because both GBP/USD and USD/JPY contain USD.

Now, let's take a look at the buy/sell prices for the above two currency pairs:

GBP/USD: 1.5630 (bid price)/1.5635 (ask price)

USD/JPY: 89.38 (bid price)/89.43 (ask price)

To calculate the GBP/JPY bid price, you simply multiply the GBP/USD and USD/JPY bid prices.

If you get 139.70, then your calculation is completely correct.

Similarly, if you want to calculate the selling price of GBP/JPY, you need to multiply the selling prices of GBP/USD and USD/JPY. Easy, right?