GBP/USD risk reversals jump to highest since March 11

Omkar Godbole FXStreet Contributor

One-month risk reversals on GBP/USD, a gauge of calls to puts, jumped to 3-1/2 month highs on Thursday, indicating a weakening of demand for put options or bearish bets on the British pound.

Risk reversals rose to -1.00, the highest since March 11, having hit a low of -6.6 in March. The gauge has increased from -2.15 to -1.00 in the last three weeks, contradicting the pair's decline from 1.28 to 1.2252.

Clearly, the options market does not foresee prolonged weakness in GBP/USD and is positioning for an upswing.

At press time, the pair is trading largely unchanged on the day near 1.2462.

Risk reversals

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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