Let’s just suppose that the Global Financial Crisis is well and truly behind us..

Before the proverbial hit the fan, EUR/USD was in the 1.50’s, AUD/USD in the .90’s, cable was above 2.00 and USD/JPY was above 1.10. Now remember we’re role playing here, but IF the world is now returning to a state similiar to that before the GFC, then this should also be roughly shown in the exchange rates. EUR/USD and AUD/USD are close to where they were before but have a look at GBP/JPY. It’s massively oversold.

This could be the trade of the year. I think that GBP/JPY is down at present levels because of massive speculation by hedge funds over the last 12 months. We saw the beginning of a possible unwinding last week. If we start seeing a full unwind, GBP/JPY will be back at 180 before the year is out.