GBP/USD risk reversals: Bearish bias strongest in 6.5-week

The demand for the GBP puts is on the rise.
The investors could be hedging against further downside in the GBP/USD.

Omkar Godbole FXStreet Contributor

The GBP/USD fell to 1.4067 yesterday - its lowest level since April 6. The drop from 1.4377 (weekly high) to 1.4067 indicates the tide has turned in the favor of the GBP bears.

The options market is also bearish on the GBP. The one-month 25 delta risk reversals are being paid at 0.5 GBP puts vs the recent high of 0.2 GBP puts. The rise in the implied volatility premium for the GBP puts indicates increased demand for the bearish bets (put options) - investors expect further GBP to slide further.

GBP1MRR

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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