FxWirePro: GBP/JPY short call review

In a previous article in January, named, “FxWirePro: Add pound shorts against yen”, available at http://www.econotimes.com/, we recommended our readers to go short in the pound against the yen at the then current rate 140 per yen and at rallies with a target of 135 and 130.

Since the call in January, the pound declined to as low as 135.6 against the yen but this week, as the UK Prime Minister Theresa May unexpectedly declared a general election in June, the call lost most of its gains and currently stands at just 35 pips in the money compared to more than 400 pips last week.

Now, the question that we are faced with or most our readers might be thinking, whether to scrap that call or not.

The answer to our mind is a no. While the announcement was a very important fundamental change and looks very positive for the pound, especially against the euro and the dollar, our models do not suggest scrapping the call; at least not now. We remain committed to the downside target around 130 yen per pound. However, we would keep a close monitoring of the pair as well as the call.