With hindsight this was not a great trade — I went long GBP/USD after the USD broke out against a range of currencies. It would have been better to pick a currency that was in a tightening cycle rather than the GBP, where more QE is a possibility despite the high inflation numbers. In fairness, I did short USD against AUD as well.

I did make a little money on it, however, and it combined well with long EUR/GBP to make long EUR/USD, which was a good trade to be in. Also, when I went into the trade, everybody was talking about renewed EUR sovereign risk. I thought this was probably nonsense but was also cautious on having another long EUR trade in case I was wrong, but wanted to be short USD against another major currency and was already long the EUR — so GBP was the default. In that light, the trade was not so bad.

Today I closed out the trade after GBP broke out to the downside against a range of currencies. I have shorted GBP/NZD, which broke a major support level.