GBP/USD: investors favor puts (bearish bets) despite recent rally in spot

Omkar Godbole FXStreet Contributor

GBP/USD has gained more than 400 pips in the last 2.5 weeks, but investors are likely expecting Sterling to surrender these gains in the near-term

Three-month risk reversals on GBP (GBP3MRR), a gauge of calls to puts on the British currency, is currently seen at -2.475, the lowest level since Dec. 14, having clocked a high of -1.70 on Jan. 14.

The sharp slide from -1.70 to -2.475 seen over the last 2.5 weeks indicates the investors have added bets to position for weakness in the pound.

Interestingly, GBP/USD picked up a strong bid at lows below 1.27 on Jan. 14 and printed highs above 1.3218 last Friday. Clearly, the spot and the risk reversals have moved in the opposite directions.

That divergence could be a warning of an impending bearish reversal in GBP/USD.

GBP3MRR and GBP/USD comparison chart

Author

Omkar Godbole

FXStreet Contributor

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

EUR/USD challenges 1.1700, six-week lows

EUR/USD remains under heavy downside pressire in quite a dfrreadful start to the new trading week, putting the 1.1700 support to the test amid the marked rebound in the US Dollar. The flight-so-safety environment continues to support the Greenback following the escalating conflict in the Middle East.

GBP/USD hits new yearly lows near 1.3300

GBP/USD adds to the recent bearish tone, approaching to the key 1.3300 support to reach fresh YTD troughs against the backdrop of the robust performance of the US Dollar. Indeed, Cable’s decline comes amid the firm demand for the safe-haven space in the wake of the US and Israel attacks to Iran.

Gold shifts its attention to $5,600 on fligh-to-safety mood

Gold climbs to levels last seen in late January past the $5,400 mark per troy ounce on Monday. The yellow metal’s strong uptick remains fuelled by incresing geopolitical tensions in the Middle East and the consequent demand for safer assets.

Bitcoin on brink of breakdown amid US-Iran war

Bitcoin (BTC) remains under pressure near the key support level of $65,700. Trading at $66,400 at the time of writing on Monday, a breakdown below this critical level would suggest a deeper correction ahead.

The week ahead: Conflict in the Middle East jolts markets

Events in the Middle East are obviously dominating financial markets this morning. The Brent crude oil price is extending gains and is higher by more than 8%, stock futures are pointing lower and the gold price is higher by more than 2%.

Pi Network Price Forecast: Core team offloads supply, weighing on PI recovery

Pi Network hovers below $0.1700, broadly steady at press time on Monday, attempting a recovery after a 2% loss the previous day. Sunday’s decline aligned with nearly 49 million PI tokens offloaded by the Pi Foundation, implying a spike in supply pressure that capped the prevailing four-day recovery.