It seems that the pair has been acting as per our whim fancy, please be noted that we had advocated bullish call on this pair on 28th April.
Please visit the below weblink for further readings on our previous technical call.
Bullish caution:
For now, if you refer daily charts, it must have been fetched handsome upside targets as desired. Rest is history.
On 9th may, we had also raised the caution for the turnaround to disseminate the major trend continuation and accordingly option derivatives strategy was advocated to arrest potential slumps.
Hedging piece:
Had the above strategy been deployed to your GBP exposure, at the money puts must have been trading in the money by now and short leg with narrowed tenor would have been expired worthless. Thereby, these option positions arrested the loss caused by the prevailing slumps by the tight hedge from ATM instruments for the underlying spot exposures with cost effectiveness cushioned by the initial premium received.
Well for now, with respect to GBP, as the U.K. General Election ends in the hung parliament, we now have a 'government risk premium' on top of the 'Brexit uncertainty premium'. We target EURGBP in the range of 0.84-0.90, cable to retest 1.23, while GBPJPY to hit around 135 levels.


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