GBP/USD Risk Reversal: Sell-off set to gather pace
|Friday’s upbeat US non-farm payrolls and wage growth data strengthened the bid tone around the US dollar and added to the bearish pressure around Cable.
Daily chart
GBP/USD dropped to 1.3024; the lowest level since July 26. The daily chart below shows a bearish breakdown of the rising wedge pattern. The MACD also shows a bearish crossover.
One-month 25 delta risk reversal coos, Vols rise
- One-month ATM Vols currently hovers around 7.088; the highest level since July 12.
- The 25-delta risk reversal has hit more than one-week low of -0.425.
- An uptick in the volatility gauge coupled with a rise in demand for downside protection [put option] adds credence to the bearish technicals and suggests the sell-off is set to gather pace.
GBP/USD - Sell into the rallies
The uptick towards 1.3126 levels is likely to be met with fresh offers. On the downside, a strong support is seen around 1.2933 [July 20 low].
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