The call - On January 11, 2013, we generated a Sell call on the Pound-US Dollar pair at 1.6127 levels (spot) for a target of 1.55.
The call is reproduced below: Fundamental report based call-Sell GBP-USD at 1.6127 and target 1.55. Time frame: six to nine months. Sell GBP-INR spot at Rs8,824 (February contract at Rs8,878.25). Buy 16 lots of USD-INR at spot rate of Rs5,472 (February contract at Rs5,511.50).
Profit: We booked a profit of Rs21,200 in the said call on January 28, 2013 at 1.5714 (spot) levels.
We decided to book profit after a sharp move of 2.5% in a relatively short span of two and a half weeks. The GBP-USD pair is down more than 650 bps since the pair hit the cycle high at 1.6381 on January 2, 2013. Moreover, we decided to be cautious ahead of the US GDP data due on January 30, 2013 and Federal Reserve (FOMC) monetary policy decision on January 31, 2013. Also, it is to be noted that the Bank of Japan's verbal assault on Yen might evoke a similar reaction from various central bankers, more so from the US Federal Reserve so as to weaken the US Dollar.
