Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose. CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

LIBOR definition

LIBOR, or the London Interbank Offered Rate, is a benchmark that dictates daily interest rates on loans and financial instruments around the world.

To calculate LIBOR, the Intercontinental Exchange (ICE) asks banks around the world to provide the rates at which they would offer a short-term loan to each other. It then averages each response to give the daily LIBOR figure.

LIBOR is calculated in five different currencies – the US dollar, euro, British pound, Japanese yen and Swiss franc – and seven different lengths of loan. That means that there are actually 35 different LIBOR numbers posted each day.

Financial companies around the world then use the LIBOR figure to calculate their own interest rates on loans, mortgages, credit cards and financial derivative prices. 

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