Sample recap: sterling whipsaws on central bank guidance
GBP/USD spiked 60 pips on the rate decision headline, then gave the whole move back inside twenty minutes as the press conference struck a more cautious tone. Textbook two-way volatility on a scheduled event.
The shape of the move
Headline hits, cable jumps 60 pips in under a minute. Spreads widen to three or four times normal for the first thirty seconds. Then, as the press conference starts, the market decides the headline was over-read, and the entire move unwinds.
Who got hurt
Anyone who bought the breakout with a market order paid a wide spread and probably got slipped. Anyone with a tight stop below the pre-announcement level was taken out on the retrace, then watched price close above their entry.
Who did fine
Traders who were flat and waited for the dust to settle. Twenty minutes after the headline the range was defined and the spread was back to normal.
What a new trader should take from this
- Scheduled events are the most dangerous time to be using market orders.
- A 60-pip spike is not a trend. Wait for the second move.
- If you must hold through news, size down and widen stops — or step aside.
Why spreads widen around news
Market makers pull their quotes when they cannot price risk. Fewer quotes means a thinner order book, so the gap between the best bid and best offer grows. The wider spread is not the broker being greedy; it is the market telling you nobody knows the price yet.
Not investment advice. This is general information and education, written without knowledge of your circumstances. It is not a recommendation to buy or sell any instrument. Past performance is not a reliable indicator of future results. Trading leveraged products carries a high risk of losing money. Risk warning