Trading Forex can be as unpredictable as Manchester’s famously changeable weather.

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One minute, it’s plain sailing; the next, you’re riding on rough waves.

But what if the currency markets, like Manchester’s seasons, had recurring patterns you could anticipate?

This means recurring trends, or predictable “weather patterns” in trading, normally related to specific times of the year.

What is seasonality in Forex?

Seasonality in Forex is patterns or trends that happen at certain periodic events of a year.

These aren’t coincidental, they are more often than not tied to economic cycles, world events, and even psychological peculiarities among traders.

A good example could be when some currencies strengthen at the beginning of the year in JM as a result of new fiscal policies or weaken during summer months when volumes dry out.

It’s like how businesses know they’ll sell more ice cream in July and more jackets in December.

The thing is, just because there was a pattern in the past doesn’t mean it’s going to crop up every year. Markets are nuts.

What causes seasonality?

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The reasons for seasonality in Forex are often tied to bigger global and local factors such as:

• Economic reports: Scheduled data releases – like employment rates, GDP or inflation – can move currencies. In the UK these reports are big for the pound.
• Holidays and vacations: Trading slows down during summer or year end holidays including in Manchester as businesses and individuals take a break. This low volume can cause unexpected spikes or tighter ranges.
• Corporate activity: Manchester is a business hub so year end adjustments or large currency conversions can cause fluctuations in the pound’s demand.

Seasonality reflects these trends but is never guaranteed – just like Manchester weather.

Seasonal patterns

Let’s look at some seasonal patterns that traders connected to Manchester’s economy might see:

• The January effect: The US dollar is more volatile in January due to portfolio rebalancing and new fiscal policies. For UK based traders this can be a time to watch the pound against major pairs like USD/GBP.
• Summer slowdown: June to August sees lower trading volumes as global markets go quiet. But Manchester’s tourism, events and hospitality sectors keep the local economy buzzing.
• Year end wobbles: December sees volatility as traders close positions and companies settle their books. In Manchester retail and holiday shopping adds to the mix.

Seasonal Trends in Key Currencies

How to Use Seasonality in Your Trading

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By using seasonality as a secondary factor you reduce the risk of relying on it alone.

Trade at the right time

Seasonality can also help you time your entries and exits.

• If you know the pound strengthens in January, get in early.
• Conversely if historical data shows a decline, avoid longs or look for shorts.

This timing can help you trade better and more profitable.

Is seasonality reliable?

The truth is, seasonality is not bulletproof. It’s a guide, not a rulebook. Economic conditions, geopolitical events, or central bank decisions can easily break patterns.

For example, the COVID-19 pandemic threw seasonal trends out the window. Global uncertainty led to unpredictable market movements.

So think of seasonality as one piece of the puzzle. Don’t rely on it alone but don’t ignore it either.

Pros and cons of using seasonality in Forex

Let’s weigh the good and the bad.

Pros

Cons