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GBP/USD risk reversals drop on out demand

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  • The demand for the out of the money GBP/USD put options is on the rise, the risk reversals indicate.
  • The options data validate the pair’s drop below the ascending trendline.

At press time, the GBP/USD is trading at 1.2860, having breached a key rising trendline support on Monday.  

Technically speaking, the corrective rally from the low of 1.2662 has ended and the bears are again gaining strength.

Similar sentiments are echoed by the o GBP/USD one-month 25 delta risk reversals (GBP1MRR), which are being paid at -0.975 GBP puts vs Aug. 30 high of -0.575 GBP puts.

The drop from -0.575 to -0.975 represents a rising implied volatility premium or rising demand for the GBP put options (bearish bets).  

GBP1MRR

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