Before you start trading it is essential that you understand what a currency pair is. Essentially, a currency pair is the way in which the relative value of one currency is quoted in terms of another. For example the Euro to US Dollar exchange rate is EUR/USD. If EUR/USD = 1.25 it means that you get $1.25 for every Euro you sell.
The currency pair is split into the base currency and the quoted or counter currency, with the base currency the first in the pair and the quoted the second. In the above example the Euro (EUR) is the base currency and the US Dollar (USD) is the quoted currency.
The most traded currency pairs are called the ‘majors’ which includes pairs containing the Euro (EUR), US Dollar (USD), Japanese Yen (JPY), British Pound Sterling (GBP), Australian Dollar (AUD), Canadian Dollar (CDN) and the Swiss Franc (CHF).
There is a precedent that sets which currency appears as the base pair and which currency appears as the quoted currency when quoting forex rates. Convention says that the Euro takes prominence as a base currency, then the pound sterling and so on. So a Euro/ Swiss Franc pair would be quoted as EUR/CHF.
Minor currencies are always quoted against a major currency which is the base currency. Currencies that are quoted against each other, excluding the USD, are called cross currency pairs while currency pairs involving the Euro as the base currency are called Euro crosses.
Currency pairs have nicknames. Traders and forex news reports would often shorten “the US Dollar/ British Pound Sterling exchange rate” to the Cable, while the EUR/USD is the Fibre, and so forth.