In free market economies, supply and demand is the primary enabler for price movement. Any outside forces that affect supply and demand eventually affect prices. When you are considering a trade in the British pound market some of the basic fundamentals that you should consider are:

1. Economy - The United Kingdom has one of the largest and most dynamic economies in the world. Economic indicators such as the social situation and the housing sector are major determinant factors affecting the British pound.

2. Europe - The British economy and the European economy are inextricably linked. Investors closely watch the economic indicators coming out of both economies. Even minor changes can quickly affect the flow on money and currency valuations.

The European debt crisis is a double-edged sword. It weakens the euro, but it reduces European demand for British exports and therefore affects the British economy.

3. Interest Rates - The Bank of England is responsible for determining England's monetary policy. The central bank will be looking at inflation and gross domestic product.

4. Trade Balance - The trade balance indicates whether the country is exporting more than it is importing, a positive trade balance, or importing more than it is exporting which is a negative trade balance. A positive balance will translate to upward pressure on the currency as money flows out of the country, causing greater demand, while a negative balance will have the opposite effect.