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GBP/USD risk reversals slide to 4-month low on put demand

One-month GBP/USD risk reversals fell on Friday to the lowest level since May, as investors rushed to protect themselves from Brexit-led decline in the British currency. 

Risk reversals traded at -2.37 in favor puts, the level last seen on May 11. 

According to Reuters, risk reversals gauge investor expectations for a currency’s direction and are used to hedge against expected moves. A negative number indicates demand for puts or bearish bets is outstripping calls or bullish bets, while a positive figure suggests greater demand for calls. 

GBP/USD has declined by near 700 pips this month alone on renewed Brexit tensions. 

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