Morgan Stanley absolutely nailed this one
One month ago, analysts at Morgan Stanley said to buy GBP/JPY and yesterday the pair hits its lofty target.
On November 3, analysts issued a note to clients saying to buy the pair at 128.30 with a target of 144.00 and a stop at 124.70. The trade risked 360 pips but it was only underwater briefly on election night.
That was the gut-check time for the trade and it would have been tempting to close it out as the results were rolling in and the market falling apart. But from there it's been smooth sailing, with only three minor daily declines on the way to a 1570 pip gain.
Along the way, they moved up their stop to 133 and then 136 to lock in a profit.
What's more instructive is to put the trade in perspective. Analysts at Morgan Stanley were talking about GBP/JPY longs since at least September and in that time, the pair fell more than 1000 pips, including on the night of the GBP/JPY flash crash.
They have been also trying to short the yen via EUR/JPY and were stopped out of longs in that pair in September and October. But the combined losses on those trades were around 400 pips.
And when they saw that yields were rising and the yen weakening post-Trump, they stuck with their long-held convictions for a big gain.
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