GBP/USD Risk Reversal: Sell-off set to gather pace

Omkar Godbole FXStreet Contributor

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].

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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