Options show more bearish sentiment for the GBP

The bearish bets on the pound are increasing and hit a 7 week high.

Traders continue to have negative views toward the currency. Today it fell again, against its basic peers. The sentiment is also negative for the activation of Article 50 during End of March 2017, as more investors are feeling that there might be a delay with that, and negative for the currency.

The graph shows that the 3 month risk of reversal of GBP/USD.

The currency was down 0.2% to $1.234 for today. Overall the fall is 2.5% and the conditions for reversal are disappearing fast after FED increased rates in the USA and even signaled that the rise next year maybe faster. The GBP fell against the Euro 0.3%. The risk of reversal is now at 140 basis points in favour of the puts over the calls. 10 Year Gilts are slightly changed at 1.39%.

Technicals: GBP/USD possibly breaking below strong horizontal support zone at 1.236/1.23100 and to continue its fall. The next support is at 1.222 and 1.21500. Options expire at 1.2500 equal to 943М GBP.

EUR/GBP formed a bottom at around 0.8330 and now is trading higher close to its resistance 0.84600. Break above here and next resistance is at 0.85800. Many analyst think that Euro maybe equal to the pound faster than US dollar to be equal to the Euro, but the Market will show.

Overall investors are still negative on the currency and we continue to be short GBP/USD. The political situation in the country and trade agreement talks with EC are not helping it.

Read more:

• GBPBGN: increase in price is more probable from the current levels
• EURGBP: probability for an upcoming downward impulse
• GBPUSD short term sentiment in front of important data at 11:30 (GMT+3)
• A price below 2.268 can lead to a new decline by the pound
• Pound rises after the defeat of May’s Brexit deal