Stupid question....

[metrader]

I would buy usdjpy instead – it's similar, but you pay only one spread and it's simpler/easier to do imo

“Life is really simple, but we insist on making it complicated”

 

[options-george]

I wouldn't expect NZD/USD + GBP/USD to be double the spread of GBP/NZD. Nor would I in most cases like this. I'd just expect the two combined to be higher than the one.

That said, if you can do a synthetic position for cheaper than doing the outright, then it totally makes sense to do it!

Just to come back to you on those numbers. For me, the spread costs including commissions (with FXCM) are as follows:
GBPNZD - 3.8 pips - where pip is expressed in NZ dollars
NZDUSD - 1.6 pips - pip expressed in US dollars
GBPUSD - 1.2 pips - pip expressed in US dollars

Thus using GBPNZD is 3.8 pips which is 2.5 US-dollar pips, compared to 2.8 pips of doing two seperate trades. Thus, in this case, the transaction costs are roughly the same.

(Please [anyone!] do point out if I am making a mistake in the calculations here!)

 

[Rhody Trader]

Just to come back to you on those numbers. For me, the spread costs including commissions (with FXCM) are as follows:
GBPNZD - 3.8 pips - where pip is expressed in NZ dollars
NZDUSD - 1.6 pips - pip expressed in US dollars
GBPUSD - 1.2 pips - pip expressed in US dollars

Thus using GBPNZD is 3.8 pips which is 2.5 US-dollar pips, compared to 2.8 pips of doing two seperate trades. Thus, in this case, the transaction costs are roughly the same.

(Please [anyone!] do point out if I am making a mistake in the calculations here!)

The current quotes I'm looking at - which obviously may be very reflective of time of day - show a much higher GBP/NZD spread. Around 10 pips, with the other two at less than 2 pips. With NZD/USD at about 0.6770 that makes the GBP/NZD spread about 6.77. In that case, a synthetic makes sense because the two legs combined are cheaper - not counting any commissions.

Your case is more what would be expected, especially when the pair created by the synthetic is one of the more liquid ones. Doing the legs is slightly more expensive. You call it roughly the same, but if this is something done frequently and/or in size, that fraction of a pip difference adds up.