My understanding of forex is limited so please bear with me.
I believe foreign currency rates are traded in pairs, e.g. USD vs GBP at a price set by supply and demand.
Does this mean that it can lead to inequalities? For example if we have GBP,USD and EUR. If 1 GBP = 2 USD, and 1 USD = 2 EUR.. then logically 1 GBP should equal 4 EUR.
However if they are traded pairwise, this need not necessarily be the case. I imagine it tends towards that price as an equilibrium, but in practice there must be a lot of the time when you have this inequality.
Then the question is, is this property exploited for financial profit?