Account credit, leverage, spreads

I am starting to learn about forex trading. I have opened a demo account.
A few things I want to get clear about.

  1. My account currency is in GBP. When I do trades in other currencies
    how does this gets converted to my account currency.

For example I have opened a new account. I have £500 balance.
How does it work that I can do a sell euro to buy usd. I dont any euro.

  1. Does the leverage available exceed the balance in the account?. What happens on losing trades that have used leverages.

From the broker point of view how can leverage money get collected on losing trades if the account balance is less.

  1. What can be concluded with spreads as a trend. what does it mean is happening in the market when spreads get tighter or wider
  1. When you trade a pair which doesn’t contain your account currency, the margin for a trade converts into respective currency according to the current exchange rate.
  2. When you use leverage the pace of losing (or profiting) increases respectively. When losses on a trade reaches critical level you will receive margin call to add some money, or finally stopped out. And again with small trading margin and high leverage you can use your money almost instantly in case of rapid price changes.
  3. Liquidity providers widen spreads when there is a situation that too much traders want to sell or to buy. For example take Brexit. When the outcome announced it was clear that Pound will depreciate. When too many traders rushed to sell Pound liquidity providers were forced to counterbalance raising transaction costs.
    Hope its clear.