Indirect Quote in Forex: Definition and Meaning Explained
By Ken Chigbo, Founder, KenMacro. Published 2026-05-13.
Quick answer
An indirect quote expresses the price of one unit of the domestic currency in terms of a foreign currency. From a UK perspective, GBP/USD at 1.27 is an indirect quote, showing that one pound buys 1.27 dollars. It is the inverse of a direct quote, which prices foreign currency in domestic units.
What is indirect quote?
An indirect quote is a foreign exchange pricing convention where the domestic currency is the base and the foreign currency is the quote. The figure tells the reader how many units of foreign currency one unit of domestic currency can purchase. The convention varies by country of reference. For a trader sitting in London, GBP/USD, GBP/EUR and GBP/JPY are all indirect quotes because sterling appears first. For a trader in New York, those same pairs are direct quotes. The structural opposite is the direct quote, which inverts the base and quote relationship so the domestic currency is priced in foreign terms.
How traders use indirect quote
Retail traders rarely need to convert quotes manually because platforms display every pair in its conventional market form, with GBP, EUR, AUD and NZD almost always functioning as the base currency against the dollar. The practical relevance shows up in three places. First, when reading central bank commentary, the Bank of England and ECB discuss sterling and the euro using indirect convention, so a rising number means domestic strength. Second, when calculating pip value, an indirect quote against the account currency changes the pip arithmetic compared with a direct quote. Third, institutional desks running multi-currency books reconcile P&L by normalising every position back to a single home currency, which means flipping indirect quotes into direct ones when the reporting base differs from the trading base.
Worked example of an indirect quote
A London-based trader sees GBP/USD trading at 1.2750. This is an indirect quote from the UK perspective: one pound sterling buys 1.2750 US dollars. If sterling strengthens and the rate moves to 1.2850, the indirect quote has risen, confirming domestic currency appreciation. To convert this to the direct quote a US trader would use, the desk takes the reciprocal: 1 divided by 1.2750 equals roughly 0.7843, meaning one dollar buys 0.7843 pounds. The same market price, two conventions. The direction of the number moves opposite ways depending on which side of the Atlantic the reader sits.
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Frequently asked
What is the difference between a direct quote and an indirect quote?
A direct quote prices foreign currency in domestic units, so a UK trader sees USD/GBP at 0.78 meaning one dollar buys 0.78 pounds. An indirect quote inverts that relationship, putting the domestic currency first, so the same trader sees GBP/USD at 1.27 meaning one pound buys 1.27 dollars. The two are mathematical reciprocals of each other, expressing identical market information in opposite formats.
Which currency pairs use indirect quotes by convention?
From a US perspective, the dollar functions as the quote currency in GBP/USD, EUR/USD, AUD/USD and NZD/USD, making these indirect quotes for an American trader. The convention reflects historical market practice rather than any technical rule. Sterling has been quoted with itself as the base since long before decimalisation, and the euro inherited that convention at launch in 1999. Most other pairs put the dollar first.
Does an indirect quote rising mean the domestic currency is strengthening?
Yes. Because the domestic currency is the base in an indirect quote, a higher number means each unit of the domestic currency buys more foreign currency, which is the definition of appreciation. If GBP/USD moves from 1.25 to 1.28, sterling has strengthened against the dollar. This is the opposite reading from a direct quote, where a rising number signals domestic weakness because foreign currency has become more expensive.
Why do brokers display all pairs in conventional format rather than letting traders choose?
Standardisation matters for liquidity. Interbank pricing, futures contracts, options strikes and economic commentary all reference pairs in their conventional form. If brokers allowed each client to flip the convention, order routing and quote aggregation would fragment, spreads would widen and reconciliation across counterparties would break down. The trader’s domestic perspective is handled through account currency conversion rather than quote inversion.
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