GBP/USD - Neutral bias in options market ahead of UK Mfg. PMI

GBP/USD Risk reversals and Vols drop, suggest neutral bias.
UK Jan Mfg. PMI due at 09:30 GMT.

Omkar Godbole FXStreet Contributor

GBP/USD ran into bids at 1.3980 on Tuesday and jumped to 1.4233 yesterday, adding credence to Tuesday's bullish outside day candle and indicating scope for a break above the recent high of 1.4345.

However, the options market has turned neutral, signaling range bound action ahead/neutral bias. The GBP/USD one-month 25 delta risk reversals are paid at -0.2 GBP puts. Just a week ago, FX dealers were demanding a record high volatility premium for GBP calls (+0.4), but have since returned to a neutral to negative bias (negative risk reversals indicate puts are in demand).

Also, the one-month at the money (ATM) option volatility gauge hit a one-week low of 8.75 today, i.e. dealers are selling GBP vols, meaning the market does not expect big moves in the GBP in the short-run.

That said, a better-than-expected UK Jan manufacturing PMI could lift GBP/USD. However, only a convincing move above the recent high of 1.4345 could revive demand for GBP calls and push up vols. On the other hand, a big miss on the data could set the GBP/USD on track towards Tuesday's low of 1.3980. A violation there could strengthen the demand for GBP puts.

GBP/USD Technical Levels

The spot traded just below 1.42 levels in Asia. A close below 1.4145 (1-hour 100-MA + 1-hour 50-MA) would open up downside towards 1.41 (1-hour 200-MA) and 1.4083 (Jan. 25 low). On the other hand, a move above 1.4233 (resistance on the 1-hour chart) could yield 1.4287 (Jan. 26 high). A violation there would expose the recent high of 1.4345 (recent high).

	TREND INDEX	OB/OS INDEX	VOLATILY INDEX
15M	Bearish	Neutral	Expanding
1H	Bullish	Neutral	Low
4H	Bullish	Neutral	Expanding
1D	Bullish	Overbought	High
1W		Overbought	Expanding
Updated Feb 1, 03:15 GMT

Author

Omkar Godbole

FXStreet Contributor

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

GBP/USD drops toward 1.3500 after weak UK jobs data

GBP/USD extends losses toward 1.3500 in European trading hours on Tuesday. The UK ILO Unemployment Rate held steady at 4.9% in the three months to June, against a forecast of 4.8%, while Employment Change arrived at 83K in the same period versus 147K previous. Weak UK labor data keep the British Pound under pressure, driving the pair lower.

EUR/USD flat lines below two-month high amid oil-driven inflation fears

The EUR/USD pair holds steady around the 1.1575-1.1580 region during the Asian session, and for now seems to have stalled the previous day's modest pullback from a two-month top. However, a modest US Dollar uptick warrants some caution before positioning for the resumption of the recent move higher from the 1.1350 area, or the July monthly swing low.

Gold remains depressed below $4,400 amid oil-driven inflation fears

Gold sticks to modest intraday losses below the $4,400 mark heading into the European session on Tuesday, and seems to have snapped a two-day winning streak. The US Dollar builds on the overnight bounce from a two-month trough as inflation risks stemming from higher oil prices underpin prospects for at least one interest rate hike by the US Federal Reserve in 2026.

Ripple and Stellar remain under bearish pressure as corrective declines cap upside

Ripple and Stellar remain under pressure as broader market uncertainty and weak technical momentum weigh on both altcoins. XRP is hovering below the key $1 mark on Tuesday while XLM continues its corrective decline below $0.157. Meanwhile, mixed derivatives and on-chain signals indicate cautious sentiment, leaving both cryptocurrencies vulnerable to further downside.

Silver’s new era: Supply deficits meet exploding industrial demand

Silver has experienced a wild ride in 2026, but The Silver Institute President and CEO Michael DiRienzo says investors shouldn’t let the volatility obscure a much bigger story: the underlying silver market remains remarkably strong.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.